How To Use Hard Money Loans To Grow a Real Estate Business

Investing in commercial real estate is one of the most popular methods of growing wealth right now, but the wide participation in the market drives competition as much as it provides opportunity. To grow your real estate investment business competitively, you need the resources to turn properties fast and to close even faster. Whether your goal of the moment is a long-term income property or a fast flip, hard money loans represent a great opportunity to engage competitively in the market. The best news? There are a few different types to suit different goals.

House Flipping Loans

Fix and flip loans are typically built with single-family homes in mind, but many of them do support values up to the average quadruplex. If you’re just starting with multi-family housing, it’s an accessible way to branch out and serve the turnkey investor market. The collateral requirements and interest rates are similar to a generic commercial real estate bridge loan, but flipping loans differ because they offer a higher LTV than many other types of hard money loan. They also average shorter repayment terms, since they are meant for a quick turn.

Commercial Property Loans

If you’re looking for a real estate bridge loan that has longer repayment terms, commercial property loans offer three to five years with LTVs between 40 and 60%. They are used by investors looking to improve long-term investment properties quite often. These loans are also quite popular with businesses that need capital and own their own buildings. In most cases, you can refinance a property you own outright to get the working capital and then put it into a new investment, so the possibilities are endless.

Stated Income Real Estate Loans

It would often be a lot more efficient if you could get a business loan based on a building’s monthly income, especially if you could also enjoy the low interest rates and relatively long repayment terms offered by commercial property loans. That’s essentially what a stated income commercial real estate loan offers.

There are often differences in LTV potential depending on the collateral’s value and the property type, so it’s more cost-efficient for some income properties than others. Stated income loans are also working capital loans, so you can use a stabilized investment to raise the funds needed to turn around and close on a new property you’ll need time to get into shape. That makes it an especially powerful tool for investors with an expanding portfolio and a few successful investments already.


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