The real state market, despite its clear ebb and flow in recent times, is still viewed as one of the most profitable long-term investments one can make. While the market will go through volatile periods, the general rule of thumb is that properties increase in value annually. Hence, home buying has been and will always remain a consistently popular venture for investors everywhere – and many start by acquiring a real estate investment loan.

The concept of a real estate investment loan is easy. A buyer / borrower requires funds to start his or her real estate investment. The borrower will approach a lending institution – traditionally a bank – and apply for a loan, which will be determined by countless factors. The size of the loan, the amount of cash in hand for down payment, the condition of the property, the borrower’s bank statements, credit history – these things are just the tip of the iceberg of the long process of obtaining a loan.

But do you consider yourself a conventional or unconventional investor? It’s a question you should ask yourself before deciding on the kind of real estate investment loan you need.

Conventional Vs. Unconventional

For conventional borrowers that maybe be investing in one property for life, there are conventional loans like the one detailed above. For unconventional borrowers, there is a kind of real estate investment loan that is much for useful, called a hard money loan.

By unconventional, we refer to borrowers that take the ‘investment’ in real estate investment loans to heart. Whether that means you are a budding ‘house flipper’, wish to purchase a piece of land you know will draw interest of a buyer in a short period of time, or just a first time buyer who can’t wait for a conventional loan in order to buy the perfect home; you have a much more fined tuned sense for the business aspect of real estate, and really just need the chance to prove it.

Unconventional buyers like these always need to get a real estate investment loan as quickly as possible to make a deal, and there’s nothing faster than a hard money loan. As long as there is a property to invest in, you have exactly the collateral a private lender needs to provide a loan. One simple loan application is just about all the paperwork you need in order to get the loan in under a week.

It’s not a game

The prospect of a quick and easy loan is immediately exciting for many first-time and seasoned investors. It is true that even borrowers with bad credit, no credit, or limited income have the potential to get a hard money real estate investment loan from a private lender. But just because it feels like a blank slate or second chance, doesn’t mean that your investment should be reckless. It is indeed not a game, and making smart decisions can make all the difference to your success.

Always remember that you are required to pay back the loan. In the case of a real estate investment loan from a private lender, while the application and approval process is simpler than that of a bank, the period of the loan is generally shorter and the interest rate is much higher. Be prepared to have to pay back the loan in a period of less than two to three years, while also being responsible for up to a 20% interest rate, more than double of what the national mortgage interest rate is. Taking into careful consideration the potential of your investment to come to fruition during this time period and to turn a profit is key.

As an investment and a business, and the risks can be quite clear. But if your potential real estate investment is a ‘sure thing’, and your research and preparations are top notch, taking out a hard money real estate investment loan may start you on the path to be an effective and profitable real estate investor.

To find out more about real estate investment loans and whether a hard money loan is right for you, consult Lighthouse Capital Funding. We are a private lender that specializes in providing you with a convenient and effective solution to your hard money needs. Contact us today.