Investment & Rental Property Loans for California

In order to obtain rental property financing from a hard money lender, the real estate investor is typically required to make a minimum down payment of 25%. Financing of 100% is not accessible. Obtaining hard money loans for rental property is generally straightforward for real estate investors who possess the required down payment and adequate income or cash on hand to cover the property’s holding costs. Hard money lenders for rental property are able to disregard bankruptcy, foreclosure, short sale, or loan modification records, as well as low credit scores and other issues that would disqualify other lenders from providing investment loans for rental property.

In the event that a real estate investor possesses adequate equity in another property but lacks the necessary funds for a down payment, a cash out refinance loan could potentially be obtained to provide the necessary funds for the purchase of the new rental property. Additionally, the lender will assess whether the investor possesses adequate cash reserves to address potential tenant vacancies, maintenance, and any other unanticipated complications.

Generally speaking, hard money lenders do not offer long-term rental property loans. Typically, the longest terms offered are between three and four years. Typically, rental property hard money loans are amortized over thirty years; however, a balloon payment becomes due at the conclusion of the term. The lender will require prior knowledge of the intended departure strategy of the real estate investor in order to ascertain the borrower’s approach to repaying the rental property loan. Refinancing the rental property loan into a conventional long-term loan or selling the property could constitute the exit strategy.