Investment Loans For Real Estate In The USA

Real Estate Investment in the USA is significantly profitable but it requires extensive financial resources which you could get in the form of Investment Loans For Real Estate.

If you’re looking to establish an additional source of income through investing, Real Estate is a great option for you, as it can be a very lucrative investment.

The United States is known globally for having great real estate investment opportunities. The real estate market is a substantially large one that benefits numerous investors day in day out, and it keeps growing in value with high rental yields.

Although Real Estate Investment is a very profitable endeavor, it requires significant financial resources which most people don’t have.

This is where Investment Loans for Real Estates come in. One can get such a loan, use it for this profitable investment, and pay it back at a later date.

However, getting an investment loan for a real estate is not easy to get, due to the different types of loans and varying interest rates that come with some of them.

This article will take you through all that there is to know about Investment Loans for Real Estate in the USA.

What is Real Estate investing?

Real Estate Investing is the purchase of a real estate property with the aim to sell or rent out to generate income. It is the act of buying a land, building, or an infrastructure for the purpose of making profit rather than living in it.

Classification of Real Estate

• Residential Real Estate.
• Commercial Real Estate.
• Land.
• Mixed-Use.
• Industrial Real Estate
• Retail Space.
• Fix and Flip Properties.

Ways of Investing in Real Estate in the USA

1. Rental Properties: You can invest in real estate by renting out your property. However, you must be ready to play the role of a landlord and manage tenants.

2. House Flipping: Another way of investing in real estate is House flipping. When house flippers purchase any property, they don’t invest in improving it, all they do is purchase undervalued properties and sell it to make profit in a matter of months.

3. Real Estate Investment Trusts (REITs): This is a way of investing indirectly in real estate, in the sense that you don’t invest your money directly in a property, instead, you invest your money in a corporation that deals in real estate investment. The corporation sells you a stock by using your money to buy and manage income properties. 

4. Online Real Estate Platforms: This is an online real estate investment where you join a group of people to invest in a large commercial deal.

What is an Investment Loan?

An investment loan is the type of loan that a borrower obtains for the purpose of funding a project. The project can be in form of the construction or renovation of fixed assets, or the purchase of intangible assets.

For an investment loan, there is always a specific purpose for its attainment and the borrower is obligated to use it for that exact purpose.

What is an Investment Loan for Real Estate?

This is the tyoe of loan taken for the primary purpose of buying a real estate property with the prospect of profit making.

How do I Apply for an Investment Loan?

1. Shop around for an investment loan lender: The first step here is to find a lender who offers the type of loan and interest rate that fits into your plan.

2. Fill out an application: Find out the mode of application for the type of investment loan that you’re applying for and apply.

3. Provide additional asset documentation: You will need at least 2 months of bank statements and any recent rental information on the property you’re buying.

4. Hire an appraiser: The next step is to hire an appraiser who will help you carry out a research on the average rent charged on similar homes in the area.

5. Go through your closing disclosure: After all the steps listed above, the lender will give you a closing disclosure, you are expected to go through it thoroughly to ensure that all the figures are exactly what you wanted.

How Do I Qualify for an Investment Loan?

1. Employment History: Just like when you’re getting a home loan, obtain an investment loan requires you to present evidence of provable employment. You are required to show your employment history. This helps to assure the lender that you have a steady source of income, ergo, you have the capacity to pay back the loan.

2. Debt to Income Ratio (DTI): This is how lenders calculate the debt you are about to incur against your income and other debts that you already have, and ascertain your ability to afford the property.

3. Credit Score and Credit History: A good credit score is is one of the factors considered before you can qualify for an investment loan. You are expected to have a clean credit history and a credit score of at least 620.

4. Down Payment: The final one is your ability to drop 20-25% of the purchase price as a down payment.

Types of Investment Loans (for real estate)

Before applying for an investment loan, it is advisable to know the types that we have and how they work. This will help you make a sound decision, as you will know the type of investment loan that suits your needs. Here are some of the investment loans that you can obtain for real estate investment:

1. Conventional loans: This type of investment loan often requires a higher credit score before you can get a low rate but what makes it better than a government-insured loan is that you don’t have to live in the property that you are about to purchase. This makes it a great investment loan for real estate.

2.FHA loans: This type of investment loan doesn’t require a good credit score to get lower rates but you are required to live on the property that you’re about to purchase for at least 12 months. However, you could buy a two- to four-unit home, live in one of the units, and rent out the rest.

3. VA joint loans: This loan allows qualified military borrowers to purchase a property with up to seven units but they have to live in it. It is also a government-insured type of loan.

4. Owner financing: Here, the seller lends you the money to purchase the house in exchange for a huge down payment, which you can’t get back.

To Conclude

Real estate investment is one of the most lucrative and flourishing markets in the USA but getting into the business requires serious financial resources. You could always get an Investment Loan for Real Estate but you need to figure out the type of investment loan that will go with what you are planning.