Financing Investment Properties: A Guide for Newbies

Investing in House

If you’ve dreamed of investing in real estate in Texas but hesitate to jump in because you’re not sure about financing, continue reading. Real estate investing is one of the safest pathways to financial freedom and long-term wealth building. Don’t let a lack of funding cause you to abandon the dream. By following this guide, you’ll learn a few basics designed to help new investors fund their real estate projects.

Stash That Cash

If you currently own the home you live in, unless you had down payment assistance, you brought cash to the closing table. Real estate investing also requires cash. Stockpiling cash should be the goal of any new real investor. The more money you put away, the less you need to borrow when you start talking to lenders for real estate investors. Also, even though you may be able to finance your projects, you’ll still need cash for renovations. Cash also gives you more options when looking for future investments. If you can make cash offers or have larger cash down payment than other investors, you can often beat out your competitors.

Credit Scores Matter

While your credit score won’t bear as much weight for investment financing as it did when you applied for the mortgage on your home, your credit rating still matters. Several factors influence financing terms on investment properties. For example, lenders look at the loan-to-value (LTV) ratio. Because investors pose a higher default risk than homeowners, investment lenders mitigate their risk by requiring lower LTVs. When you meet with investment lenders in Texas, you may find that they look more at the collateral than your borrower profile. That doesn’t mean you can ignore your credit score. A credit score is still an important part of the loan approval process.

Consider Short-Term Loans

Traditional home loans usually come with terms of 15 or 30 years. That’s why big banks and mortgage lenders aren’t always the best financing option for investors. You want financing that helps you secure a property, renovate it, and sell it. Private investors specialize in short term loans. The terms average around 12 months, but you can extend the loan period for 2-5 years. Most short-term loans require either interest-only payments or interest and principal. You’ll then have a balloon payment at the end of the loan term.

Calculating Loan Amount

Ask Family and Friends

Also known as private money lenders, individual investors are another excellent source of funding for newbie real estate investors. Look at your network of family and friends. You likely know someone who has money they’d like to invest. You can often find private investors among your co-workers. Participate in local real estate investing meetups. You may find a partner there as well. The key to private money is making sure you put together a great presentation for your project. Private lenders want to know they’re putting their money into a project with a well-thought-out plan.

Real estate investing doesn’t have to be intimidating. If you’re ready to take the next step and seek financing for your investment projects, you’ll want to work with the experts at Investor Loan Source. Start the application process at

Private Money Lenders: A Dream for Real Estate Investors


Every real estate investor knows that without money, there’s no deal. They also know banks and mortgage companies aren’t always the best solution for funding projects. If you’d rather fund real estate investments without using traditional financing, consider hard money lending. Here are a few reasons why private money lenders are often considered a dream for real estate investors.

Money in Your Hands Faster

If you’ve ever applied for a traditional real estate loan, you know how long it can take. Time is of the essence for real estate investors. Without fast funding, you run the risk of losing out on lucrative deals. Private money lenders understand the importance of buying, rehabbing, and selling a property quickly. Most private lenders can fund your project in a few days. Some can put money in your hands in a matter of hours.

Less Bureaucratic Red Tape

Traditional lenders require what feels like reams of documentation before they’ll close on a loan. Often it’s the documentation that holds up a loan. You lose time, and as mentioned above, time isn’t your friend when looking for good real estate deals. It’s not only time, but the loan process with a bank or mortgage company can also be invasive. These lenders want to know every detail of your past, present, and future financial life. Private money lenders, on the other hand, aren’t so concerned with your private life. Private money loans are usually asset-based. If you have collateral that qualifies, you’ll get the loan.

No Worries about Hidden Fees

When you closed on your first real estate loan, did you really understand what you signed up to pay? Most people understand they’re paying for the property, interest on the loan, and certain costs to close on the loan. What they don’t understand are the fees added on by the lender. Often, there are multiple fees obscured in the loan documents. When you’re at the closing table, you’re fed document after document. The closing specialist does explain the documents you’re signing but it all happens quickly. You may not realize what fees you’ve agreed to pay until you take time later to read the documents you’ve signed. Private money lenders who specialize in investor loans, don’t hide fees. You’ll know upfront what you’re borrowing and what you’re required to pay back.

More Leniency with Credit Scores

Traditional lenders focus on credit scores. If you have a bad credit score, foreclosure, or bankruptcy on your credit record, you may have difficulty getting approved for a loan. Investors applying for hard money loans in San Antonio  generally experience a more lenient credit scoring process. Private lenders do look at credit, however, they’re often more receptive to investors with lower credit scores. If you’re applying for a conventional mortgage, you’ll need a credit score of 640 or higher. Private lenders typically require a credit score over 550.


Unlimited Borrowing Opportunities

Most banks and other traditional lenders limit the number of mortgages to between 4 and 10 per borrower. For a serious real estate investor, this limitation can prevent any substantial growth. Your funding opportunities with a private money lender are generally more generous. If you can prove you’re a good risk and have qualified collateral, there isn’t a limitation on the number of hard money loans you can apply for.

We’ve covered just a few reasons why private money lenders can help a real estate investor’s dreams come true. If you’re looking for reliable and fast funding for your real estate project, contact Investor Loan Source. We understand real estate investing and know how to get a project funded with minimal paperwork and inconvenience to you.