Investing in real estate typically requires a good amount of money. If you don’t have a bunch of spare cash sitting around, you’re likely going to need to consider getting a real estate investment loan. Before moving forward to the different investment property loans, though, let’s talk about the types of rental properties.
Types of Investment Properties
To enlighten you more about real estate property, here are some types of rental properties you can invest in:
Residential: Rental homes are a common way for investors to gain additional income through the monthly rental fees from your tenants or renters. These can be condominiums, single-family homes, apartments, condos, and other types of residential structures.
Commercial: Rental properties do not always have to be residential. Other investors go on commercial properties that are used exclusively for business purposes. It provides a high-risk return because the improvements and maintenance can cost more than the residential properties. However, more significant gains can offset these costs because the rent for these properties is way higher than residential properties. These buildings may be classified as apartment buildings or retail store locations.
Mixed-Use: This property is designed for both commercial and residential purposes, which can be of dual-use. For example, a building may have a storefront on the main floor, such as a retail store, bar, or restaurant, while the upper portion or the back of the structure houses residential units. These properties may also be called income properties because you can opt to rent the building out to potential tenants while you are holding the title.
What You Need to Know About Investment Property Loans
Rental or investment property loans are used for buying out or renovating a property. These properties were either resold or rented out, and the loans you acquire for these properties are payable on a short-term or long-term basis, depending on your preference. These loans are available from large national banks, local community banks, and hard-money lenders.
How Do Investment Property Loans Work?
When choosing an investment property loan, keep in mind that the investment property or the building will act as the collateral. The money lenders will finance the renovation or purchase of the investment property.
In most cases, a hard money lender will lend you a portion of the property after repair value. The property will be estimated for its value on the market after the renovation in which they will lend you 60% to 80% of the property’s ARV(after repair value). This value or amount is different from banks because they base the amount of loan on the current market value, which is way lower considering the repairs and the current condition of the property.
Get Property Management Here
Need property management for your Waltham area investment properties? Contact Martin Property Management today by calling us at (617) 957-0166 or click here to connect with us online.
