Investment Property Lending

A hot topic of discussion today surrounds borrowing funds to invest in real estate.  Given the current economy, many individuals and businesses are looking to take advantage of the large numbers of homes and other properties on the real estate market by obtaining loans to purchase bank-owned or other investment property.

Several types of property would qualify as investment real estate.  These types of property include long-term rental properties, vacation rental properties, apartment complexes and multifamily, office, hospitality and others.  If you are looking to purchase real estate that fits into one of these categories, special financing must be obtained before making the purchase.

One of the best ways to obtain financing for making an investment real estate purchase is through an investment property mortgage. If the property is distressed you will most likely need hard money. In some special cases a global cash flow analysis can support a distressed property loan with a traditional lending source. In any case you should have a banker carefully review your case and circumstances before engaging hard money. This will reduce your acquisition cost of financing and allow you to keep more dollars in your pocket.

Expect a LTV’s to come in about 75% on the high end for acquisition. Some hard money sources will engage a joint venture for 100% acquisition finance; however, these ventures come at a steep cost.

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