An investment property line of credit (LOC) is short-term financing on a property that isn’t owner-occupied. A lender will place a lien on an investment property in exchange for a revolving line of credit against the property. It operates the same as a home equity line of credit (HELOC). An investment line of credit is…
Real Estate Investing
Mixed-use Loans: What They Are and How They Work
Real estate investors use mixed-use loans to finance buildings that are used for a combined purpose. Mixed-use buildings are zoned for multiple uses, including residential, commercial, industrial, or institutional. Mixed-use loans can be short-term or long-term, with terms ranging between six months and 30 years. Any building with at least two units of different zoning…
What Is the Loan-to-Cost Ratio: Formula & How To Calculate
The loan-to-cost (LTC) ratio is the relative comparison between the loan amount of a commercial mortgage and the total cost of a rehabilitation or construction project. The LTC ratio helps investors determine the riskiness of commercial real estate investments. It’s used primarily for two types of commercial mortgages: rehabilitation loans and construction loans. The higher…
What Is After Repair Value: ARV Formula & How to Calculate
The after repair value (ARV) is the estimated value of a property after repairs and renovations are completed. It allows investors to determine a potential investment’s sales price, repair budget, and profitability. It is used when long-term investors estimate the long-term rental value of a property and when fix-and-flip investors buy, rehab, and sell properties…
Loan-to-Value (LTV) Ratio: What It Is and How To Calculate It
The loan-to-value (LTV) ratio compares the size of a loan relative to the value of the property being financed. Regardless of what type of loan you apply for, a lender will calculate the LTV ratio as part of the approval process. The maximum LTV ratio varies depending on the loan type and borrower qualifications. For…
What Is a Portfolio Loan? Types, Rates & Terms Explained
A portfolio loan is a mortgage loan that is held by the mortgaging company and not sold on the secondary market to the Federal National Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage Corporation (Freddie Mac). Portfolio loans help small business owners who cannot qualify for a traditional mortgage loan or who want…
5 Best Hard Money Lenders for 2022
A hard money loan is mortgage financing for businesses that cannot get funding from other traditional lenders, either due to credit issues or properties in disrepair. These loans are considered a last resort in mortgage financing due to higher interest rates and fees. Traditional lenders usually have better rates for longer terms, while hard money…
5 Best Real Estate Portfolio Lenders for 2022
Portfolio loans are mortgage loans that aren’t sold to Fannie Mae or Freddie Mac on the secondary market. Small business owners that cannot qualify for a traditional mortgage or want to finance multiple properties with a single mortgage can turn to portfolio lenders for financing. Because portfolio lenders don’t have to use federal guidelines in…
5 Best Investment Property Loan Providers of 2021
Investment property loans are often found through online mortgage providers, investor-only lenders, and larger banks. Investment mortgages typically range from $75,000 to more than $2 million, requiring a minimum down payment as high as 25%. These rental property loans often have higher interest rates than conventional mortgages due to the perceived risk that the borrower…
How To Lease Commercial Real Estate: The Ultimate Guide
A commercial real estate lease is an agreement that allows a business to rent commercial property from a landlord. Commercial leases come in three main forms: full-service leases, net leases, and modified gross leases. The process of identifying, negotiating, and signing a commercial lease is a long one. Knowledge of the necessary steps, which are…
How To Find & Buy For Sale By Owner Homes (FSBOs) in 6 Easy Steps
Learning how to find and buy for sale by owner properties (FSBOs) can be a positive experience, and we can show you how to do it in six easy steps. These steps include choosing a neighborhood, locating the property itself, securing financing, making an offer, and going through the entire closing process. This article is…
How to Start a Real Estate Holding Company or Real Estate LLC
It doesn’t matter if you’re a fix-and-flip investor or a long-term investor, it’s a good idea to put all of your investment properties in a holding company, like an LLC, for added protection. Starting a real estate holding company is also generally pretty simple and can be done online or with the help of an…