How to Find Private Lenders for Non-owner Occupied Properties

Posted by ilscash on December 26th, 2019

Investing in real estate is a way to grow wealth quickly, but only if you find the right loan. Real estate investors who buy and sell houses to flip or rent out the need to find private lenders in Texas offering non-owner occupied loans. If you’re new to real estate investing, keep reading to learn how to find the right loan to get the most out of your investment. 

What Are Fix and Flip Loans

These loans are perfect for first-time house flippers and seasoned pros. Although some programs require a credit score between 600-700 and LLC ownership to apply, most have no minimum score required and work with sole proprietors. Credit doesn’t matter as much to these programs because they focus more on the loan-to-value (LTV) ratio. Lenders want to know if you default on the loan that they can recover their investment by selling the property. 

Other things to know about fix and flip loan is that they’re short-term loans. Most have 6-month terms that require payment in full at the end of the period. Investors who choose fix and flip loans have to get in and out of properties quickly to avoid high out-of-pocket expenses. The average fix and flip loan will loan up to 1 million dollars.

What Are Rental Loans

If you plan to buy properties and rent them out, lenders consider these non-owner occupied properties because you’re not living at the address. When researching rental loans, be aware of the rental terms. Some loans are designed for a short period of only 5 years; whereas, others have maturation dates of 20-30 years. A short loan period works well for investors who want to give their renters a rent-to-buy option. Like with fix and flip loans, credit requirements fall between 600 and 700 with loan sizes up to 1 million dollars. 

Is a Down Payment Required?

Another reason investors like private lending loan products is that there’s no down payment required. These lending programs focus on loan-to-value lending and not loan-to-cost ratios. As long as you can negotiate the price of the property below the loan-to-value cost, you can secure a loan for 100% of the purchase price. 

Real estate investment lending can be hard to understand at first but has many benefits. If this is your first time considering this loan product, work closely with private lenders in Texas who will walk you through the process step-by-step.