When landlords invest in real estate, it is often referred to as a buy-to-rent, or B2R, strategy. An investor will purchase a distressed property, rehabilitate it, then rent it to a tenant. To acquire and renovate their investment property, landlords will use real estate investment loans called “hard money” which maximizes their “cash flow.” Their profit margin all depends on the original financing of the property, so acquiring great, low-rate funding for your rental investment is essential.
The term “hard money” might sound like a difficult undertaking, but it’s actually a simple, and profitable way for landlords to fund their rental investment. Hard money loans, otherwise known as landlord loans, help you secure low rates with less money down to create a wide profit margin even after funding the property rehab.
Hard money loans are used by landlords and house flippers to fund the repair of an investment property. For a landlord to acquire an investment property, repair it, then rent out to tenants, the landlord loan from Sherman Bridge is a three-part system. The process begins when a landlord obtains a rehab loan or hard money loan to fund the purchase of the property and the cost of repairs. Once the repairs are complete, the property is refinanced into a 30-year fixed conventional loan, with potentially no money out of pocket.
Hard money lenders who provide loans for landlords do not operate like conventional bank lenders. Hard money financing is not provided for an owner-occupied property but are for those who fix and flip, or fix and rent, houses for profit. When you work with a hard money loan to fund your real estate investment, it is ideally the same as using cash. The amount of money you are granted for the loan is based on the property’s value after it is repaired, known as the ARV (after repair value), instead of the actual value (AV) of the property. This feature allows you to acquire maximum leverage for your investment to fix and flip, or fix and rent and still finance the rehab.
Conventional bank loans usually take 30 – 45 days to process wholly, and sometimes more. Sherman Bridge offers pre-approval for your landlord loan in as little as 30 seconds, and you can have your loan in-hand in as little as seven days. Such a fast pace provides an advantage for most investment strategies, which is ideal for landlords and investors. Sherman Bridge also provides a flexibility that is perfect for a long-term investment strategy, and you can repay your loan up to 30 years.
While investment properties often provide some equity, investors have created their trade around creating a profit margin after improving the property and renting to tenants. So, the biggest advantage of landlord loans is the flexibility to fund renovation expenses. Hard money landlord loans are essential to purchase quickly, renovate, and rent out an investment property while still providing leeway for financing repairs.
If you’re a landlord who is looking to finance their investment property, Sherman Bridge has specifically designed loan products for landlords to create a wide profit margin on their rental. By putting down less money and taking advantage of our low-interest rates, you can increase your equity, cash flow, and begin building your portfolio by investing in more rental properties. We work with real estate flippers, landlords, and investors to finance property rehabs that will earn maximum profit. Whether your investment strategy is short- or long-term, with Sherman Bridge, you are investing in your financial success.