Investment property loans involve a few different steps before all is said and done.
With some serious money to be made through each transaction, mortgage companies, brokers, and borrowers should all be on the same relative page, or at least familiarizing themselves with the each others responsibilities in order to move forward with the details.
Sometimes these types of proceedings move rapidly; in fact, much faster than the average small business loan.
As the speed of commerce picks up with little or no time to waste, putting the puzzle pieces together in a timely fashion is strongly advisable.
With many investment property loans, the stakes can be a little higher, much like the commercial mortgage rates contained within, yet the profit margins often outweigh the nickel-and-dime costs when attempting to move up the proverbial ladder.
Prospective borrowers will need to compare and contrast the benefits and drawbacks by doing some online research and employing the use of a loan calculator or three.
Conferring with a number of experienced and trustworthy mortgage brokers may seem like a mundane task, yet finding the right liaison or middleman can be the most crucial part of the process.
Experienced mortgage brokers deal with investment property loans on a frequent basis; some are in it for themselves while others will do what it takes to satisfy borrowers and mortgage lenders alike.
Whether finding a decent broker via online research, through a local bank, or by word-of-mouth, it's best to check their small business loan track records and other commercial financial transactions, if available.
Double-checking the credentials of potential business partners isn't a crime; this is especially important when relying on hard money lenders to take care of the finances concerning a number of investment property loans.
Those who are thinking about using hard money for a bridge loan or mezzanine financing may want to consider what's at stake.
Collateral of equal or greater value is usually how these loans are secured; most hard money lenders would rather see the loan go into default, thus allowing them to take advantage of flipping the collateral at a higher and/or quicker profit margin.
It's also important for potential investors to know that commercial mortgage rates are higher than conventional small business loan rates, mainly because of the quicker turnaround time involved with these types of investment property loans.
The risks versus rewards factor is always in play with this type of expedited small business loan.
The duration of these loans are often structured from six months to two-year periods, meaning that quicker loans can turn into higher profit margins in relatively shorter periods of time.
The fix-and-flip is the most common setup, yet in certain cases, financing can extend well beyond the average time frames.
Circumstance will usually factor into the equation regarding extended lines of credit.
It's also important to point out that not all investment property loans are geared for the short-term.
Many conventional mortgage companies are willing to finance larger construction projects for industrial complexes, shopping centers, and the like.
These longer term contracts often come with lower commercial mortgage rates, yet the qualifying process is based on overall creditworthiness, as opposed to hard money lenders who could often care less about good credit ratings.
No matter the case, having a loan calculator on hand and a trustworthy commercial mortgage broker to shop the loan can end up having a positive impact on the other side of the financial coin.
Investment property loans can pay off huge when carried out with a virtually fool-proof plan.