Investor Financing in this Crazy Real Estate Market (3)

3. Hard Money Loan:


These loans became popular during the bull market for fix and flip investors.


In slower times, these are expensive loans and upfront costs and pre-payment penalties make them unfavorable for buy and hold strategies.


Rates are in the 11-14% range and typically cost 3-5% in loan fees.


Investors still look to these loans for quick transactions that have large short-term upside.


Limited documentation is required and they can be closed in a few days. 35-45% is required for down payment.



4. Foreign Nationals:


This is hot category because of the weak US dollar.


Foreign investors can buy property at an immediate discount when they use Euros or the Canadian Dollar. 20% down payment and income documentation is required.


Rates are in the 8% range.



Note: As a general rule, interest only loans are no longer available for investment properties so calculate cash-flow assuming fully amortizing loan terms.