7 Business Loan Options To Buy A Rental Property
Business loans prove to be a useful option in buying any type of rental property. It comes with the benefits of allowing you to build an estate portfolio. You can get funds from business loans to buy more rental property and for renovation and maintenance.
You need to have proper experience, knowledge, and skills to opt for a business loan. So that it does not become problematic for you in the future. The best property management companies in Orlando can help you with it.
Various Business Loan Options
Using a business loan to buy a rental property is beneficial for you as it provides you a personal guarantee. Most banks and private lenders are used as a source for these business loans. You can get more information about business loan options from the best property management companies in Orlando.
Some business loan options to buy a rental property are:
1. Traditional Bank Loans
Traditional banks are the most common source from which you can avail of a business loan. Traditional banks are usually known places where you know the employees as well. So this makes it an easy process for you. It is almost similar to applying for a personal loan because the following documents are required:
- Credit report that shows the history of paying back loans.
- Bank statements, document revenues, and cash flows.
- Business tax returns.
- Profit and loss statement that provides expense and income details.
- Balance sheets.
- Business plan.
- Personal information.
- Personal guarantee.
2. Business Term Loan
These business term loans are provided by traditional banks, private lenders, and credit unions. You can find a variety of business term loan options with different amounts and different interest rates.
This loan provides you with funds to update office space, buy equipment, purchase property, etc. in a lump sum, which will later turn into houses for rent in Orlando and other places.
Short-term business loans, also known as bridge loans, are generally repaid in a time period of 12 months. While medium-term business loans are repaid in a time period ranging from 1 to 5 years. And long term business loans can be repaid in almost 25 years.
3. Business Line Of Credit
It is almost similar to HELOC or the home equity line of credit. The company or the lender can create a credit line for the funds that can be borrowed.
This line of credit is secured by assets owned by a business and the interest rates and fees are generally lower.
4. Alternative Business Loan
Alternative business loans include invoice factoring and invoice financing. Invoice financing involves borrowing money despite the due amount on the account of customers.
Invoice factoring allows for increasing cash flows as the invoices are sold to a third party.
5. Private Money Lender
Private money lenders can be investors or investment groups that also serve as a good option for business loans. It is easier to qualify for lending money from private lenders but the interest rate is higher than other available options.
These private lenders can be difficult to find as advertising on their behalf is less as compared to traditional money lenders.
6. Portfolio Lender
These portfolio lenders keep the loan themselves on their balance sheets and do not sell it in the secondary market. This makes the terms and conditions of this type of loan different from the traditional ones.
These lenders develop their own guidelines and do not follow the traditional guidelines. The lender puts more emphasis on cash flows, because of the rule of thumb.
There is no limit to the number of properties that a business loan can finance. And the rate of permanent finance can be fixed accordingly. In this type of loan, interest rates are higher and they do not require any type of guarantee.
7. Blanket Mortgage
This allows businesses to have multiple rental properties on a single loan. The assets act as collateral assets in this type of loan. This loan comes with a release clause which does not allow refinancing.
What Is A Rental Property Loan?
It is a real estate commercial loan that allows investors to purchase and invest in properties that can further be rented out to tenants for commercial or residential purposes.
Best property management companies in Orlando can guide you in getting a perfect rental property loan so that you can start investing in real estate and earn profit.
Investing in real estate by getting these rental loans shall increase the number of houses for rent in Orlando.
Conclusion
Rental property loans are the means of providing capital for investing in real estate. You can buy a rental property by opting for business loans as it benefits you in many ways as it provides you funds and enhances the cash flows.
Various business loan options to buy rental property are portfolio lenders, blanket mortgages, traditional bank loans, private money lenders, business line of credit, etc. Best property management companies in Orlando can help you with availing of business loans.
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