This year has been volatile in many ways, and this volatility hasn’t spared the real estate market. Mortgage rates are as low as they have ever been, prompting savvy investors to scoop up properties. However, in the wake of the 2008 financial crisis, tightened lending standards have made it more difficult to secure a traditional mortgage, and the parameters have only become stricter since the pandemic started.
Fortunately, investors who don’t want this opportunity to slip by have other options. If you’re interested in taking advantage of the current conditions in the real estate market but are not able to get a mortgage with a traditional bank, consider working with a hard-money lender to gain access to the cash you need.
Although the stock market is currently unpredictable in a way that is uncomfortable for some investors, real estate remains a smart place to put your money. This is one reason investors who have money to spend are buying properties with mortgages at low interest rates. It’s also a good time to refinance any existing properties you own to take advantage of the lower rates. Some of the ways to build your real estate portfolio include purchasing residential rental properties, purchasing commercial rental properties, or fixing and flipping distressed properties.
On the other hand, if you are looking to cash out or offload an underperforming investment property, this is also a good time to sell because investors are looking for both commercial and residential rental properties. Because inventory is low, you may get multiple offers and secure a profitable deal.
With interest rates so low, this is an ideal time for flippers to find suitable properties or refinance themselves out of a previously planned flip and turn it into a rental property instead. However, if you identify multiple fix-and-flip opportunities, you need the cash to follow through. If traditional bank loans are not an option because either you or the property doesn’t qualify, consider a fix-and-flip loan.
This type of loan is based not on your credit history, but on the expected value of the property after it has been improved and the estimated cost of the improvements. You can also get multiple loans at the same time if you identify more than one opportunity, but you should be smart about the terms and make sure you have enough time to flip the properties before the loans expire.
Commercial Loan Refinancing
Investors who want to take advantage of an active real estate market but don’t have the cash for a down payment or good enough credit to secure a traditional loan can use their existing assets. Commercial loan refinancing allows you to get cash out of your current investments, regardless of your credit history. If you have equity, you can likely get this type of financing from a hard-money lender.
You can use this type of financing to build your portfolio or apply the cash to other needs. For example, many people are currently using commercial loan refinancing to cover payroll costs, inventory, or other expenses to keep their business running. If you have tenants who are unable to pay their full rent, you can also use cash from refinancing to keep up with your own mortgage payments and property expenses.
Socotra Capital Is Here to Help
Whether you want to grow your portfolio of rental properties, sell a problematic property, or leverage your commercial properties to secure cash for other opportunities, now is a smart time to invest in real estate. However, it’s not necessarily an easy time to get a commercial loan through traditional channels, which is why hard-money loans are a good alternative.If you are unable to take advantage of the low interest rates through a traditional bank loan, Socotra Capital offers hard-money loans that give you fast access to cash. Speak to a consultant today to learn more about your options.