loan on secured by real stores. These properties are
estate collateral is generally 5 or more units.
typically known as a Property that is solely used for
mortgage. This is the most single unit housing purposes is
popular form of real estate termed as residential real
investment loan used by estate. Residential loans include
investors. Real estate those properties that are bought
investments provide an for rental income and future
opportunity to generate cash appreciation. The borrower
flow. Apart from commercial initially receives a lump sum
banks, savings banks, savings and from the lender, which has to be
loan associations, credit unions, paid back in installments. To
real estate investment loans can purchase a residential property
also be obtained from insurance involves having significant
companies, mortgage bankers, funds. Before a loan is granted
mortgage trusts, investment the 3 main factors that are
trusts, pension funds and finance considered are, the investor’s
lenders. Private individuals income, credit scores and
sometimes offer real estate reserves. In order to get a loan
investment loans as well. there are 5 basic essentials,
which are interest rate, terms,
There are 2 types of real estate payment, final value and
investment loans — residential principal. Loans can carry a
loans and commercial loans. fixed interest rate or rates that
Property that is solely used for vary with market conditions.
business purposes like malls or Some loans have negative
industrial parks would be termed amortization periods; investors
as commercial real estate. should be careful of such loans.
Commercial loans include
buildings, warehouses, and Real estate investment loans
consist of interim loans, conventional mortgage lenders or
short-term loans and long-term banks may have turned them down.
loans. Apart from commercial and
residential loans, the other The longer the tenure of a loan;
types of loans that are offered the higher the rate of interest
are construction debt, permanent will be. A 30 year fixed loan
debt, equity financing, will have a higher rate of
structured financing, interim interest than a 2-year fixed
financing, mezzanine financing, loan. But people generally opt
foreclosure investor money, hard for a loan with a shorter-term
money loans and residential fixed option, as the rate of
repair funding. interest is lower and hence the
monthly payment is lower. To get
Investors may not need perfect a loan there are no
credit scores to qualify for real pre-determined limits set for the
estate investment loans. Bad real estate investor.
credit real estate loans are
designed for those individuals Some real estate investors tend
who have a less than perfect to prefer in marketable real
credit report. It is a type of estate assets. Buying shares in
sub prime mortgage and is a a REIT (Real Estate Investment
higher risk to the mortgage Trust) is one way to do this.
lender because of the past credit Investment loans can be use to
history of the borrower. Bad partially fund such investments
credit loans allow individuals to and the REIT shares are used as
obtain a mortgage for buying real collateral to secure such loans.
estate when other more
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