Real estate investment opportunities have been perennial winners for over a decade now, and even before that they were a popular way to diversify a portfolio as it matured. Today’s most popular investment method is flipping, or improving a property and selling it at the top of the market as a turnkey-ready, feature-rich, and updated piece of property. You can do this with residential or commercial investments, but either way, it’s a process that requires a lot of capital to make it to payday. That’s usually the factor that keeps investors from moving into this lucrative form of investment, but managing the costs of your investment property is a lot easier if you understand the financing options available and the best ways to use them.
Loans Built for House Flippers
Bridge loans for commercial real estate are designed to help you flip a property in many cases, and even when they’re not, they’re built to provide short-term capital that closes on the deal and gives you room to figure out what to do next. If you already know what to do, you can just use that time to improve and relist the property, so even bridge loans that aren’t specifically sold to flippers are useful. If the time comes for you to invest in long-term income property, bridge loans are also a great option because they allow you to close on an apartment building, rehabilitate it to suit the market, and then refinance it into a traditional loan structure.
Hard Money Loan Options
There are a lot of different ways to structure short-term bridge loans, but one popular choice among real estate investors is the hard money loan. You can use the equity in an existing investment property to secure the loan, providing you with the capital you need to not only close the purchase, but also to improve the property. When you sell and pay off the principal, you can pocket the profit without having put out capital for the project. That’s if you have the collateral equity to swing a loan for the full amount, of course. You can also secure hard money loans to purchase the property while funding your own improvements, which is a good risk-limiting option for those who are still learning the industry. Securing the hard money loan with the property you purchase means you’re only risking the investment itself, not another property you own. Either way, there are providers with options you should consider if you’re just getting started with investment property.