4 Ways to Finance a Real Estate Investment
Investing in real estate has long been one of the steadiest vehicles for accumulating wealth, but unlike investing in stocks or bonds, real estate investing often requires a sizeable down payment.
Fortunately, there are ways to finance a real estate investment even if you are not flush with cash.
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Conventional Bank Loan
If you have purchased an investment property you will likely be familiar with using a conventional bank loan to finance a real estate purchase.
Conventional lenders strongly review your credit score and credit history to determine your eligibility for a loan. Your assets and annual income also play a factor. Furthermore, conventional lenders must also adhere to strict debt-to-income guidelines.
These stringent lending guidelines can come with a higher barrier to entry, an arduous underwriting process, and a long approval process.
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Home Equity Line
If you already own a primary residence, you can leverage your home equity via a home equity line of credit (HELOC). In this scenario, you can typically leverage as much as 80% of your home’s equity value toward the purchase, renovation, or repair of an investment property.
HELOCs work in a similar manner to credit cards with interest-only monthly payments. Using equity to finance your real estate investment often comes with a variable rate, which means your interest rate can fluctuate if the underlying primary rate moves.
Loans are made or arranged by Wilshire Quinn Income Fund, LLC (the “Fund”) pursuant to California Finance Lenders Law license #603J060. The information contained in this message is for informational purposes only and is meant to provide general background information on the Fund and its manager, Wilshire Quinn Capital, Inc. (the “Manager”). Any and all information herein is deemed reliable but is not guaranteed.
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Cash Financing
Paying for a real estate investment with all cash provides a significant advantage. First, you will be looked upon more favorably by sellers who no longer have to worry about a delay in closing due to a loan not being approved. Second, in some cases an all-cash offer can lead to a lower sales price, as the transaction is usually a quicker process and more convenient to the seller. Lastly, an all-cash offer saves you money in the long run as you don’t have to pay interest on money borrowed.
The obvious drawback of cash financing is that most individuals don’t have large amounts of liquidity necessary to purchase an investment property with all cash. Additionally, while you will pay less interest over time, your gross return on investment could be significantly reduced by not utilizing leverage.
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Private Money or Hard Money Loan
You can circumvent the conventional lending process by obtaining a private money loan. If friends and family are not an option, you can utilize a private lender to simplify the lending process.
Interest rates and loan terms for private money loans are usually higher than conventional loans and are mostly determined by the equity in your property. Simply put, the more equity in your property, the better the loan terms.
A private money loan can also be an excellent option for flipping investment properties and accessing capital quickly. Private money lenders do not place as much emphasis on your credit score or credit history. As a result, there is much less red tape and a private money loan can be finalized in weeks rather than months.
Which is the Best Option for You?
A private money or hard money loan could be an excellent go-to option for potential real estate investors looking to access capital quickly. In addition to the simplicity of the process, investors will create a track record and could be more likely to get approved for future private money loans.
The most important part of taking out a private money or hard money loan is finding a reputable, established lender that you can trust. At Wilshire Quinn, we have been providing rapid and reliable funding for borrowers since 2011. We have since grown to become one of the premier hard money lenders in California. Contact us today and find out how we can help you reap the benefits of a hard money loan the right way.
- Funding typically in 5-7 business days
Loan Amounts from $200,000 to $20,000,000
- Interest Rates from 8% to 10.5%
Loan Term: 3 – 24 months
Commercial & Residential (non-owner occupied) Real Estate
- Purchase, Refinance, Cash-out Refinance, Rehab, Blanket Loans
Foreign National Loans Available
About Wilshire Quinn
Wilshire Quinn is a San Diego hard money lender focused on short term bridge loans, secured by first trust deeds. The company is based in San Diego, CA with offices in Los Angeles and San Francisco. Wilshire Quinn typically funds loans for their customers in 5-7 days. Their successful track record is closely linked to their ability to make immediate lending decisions based on their highly disciplined underwriting approach. The company funds a variety of loans such as: refinance, purchase, blanket, rehab loans, 1031 exchange, partnership buyouts, and more. They originate hard money loans ranging from $200,000 – $20,000,000. Wilshire Quinn works with commercial and residential buyers nationwide.
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