Real estate investors often do not have all the cash that they need to complete their purchases. Even the biggest developers in the world will need massive loans to pay for their projects. These projects often have expensive units that sell quickly, pay off the loan, and the developer starts making money. At the same time, the investor still needs to know about loans they can use to make their property investments profitable. Take a look at the three loan types below that might be helpful to you and your real estate investment business.

1. Conventional Property Loans

David Ebrahimzadeh recommends conventional mortgages for property investors. These mortgages are not offered by the government. These loans often come from banks that can also fund and provide government mortgages. The most popular loans in this category are Fannie Mae and Freddie Mac.

If you are new to real estate investment, Fannie Mae is the Federal Government National Mortgage Association, and Freddie Mac is the federal home loan mortgage corporation. These loans are backed by the government, but they are designed for massive properties. The terms on these loans tend to be very favorable, and you can get into an affordable mortgage that makes investment easier.

At the same time, you might want to try traditional homeowner’s loans if you would like to flip houses. These loans are offered by the government and include FHA or Federal Housing Administration, USDA rural home loans, and VA loans. As your investments get bigger, you will need to stick with conventional loans. You can also improve your relationship with Freddie Mac or Fannie Mae over time as you get more loans through these entities.

2. Hard Money Loans

Hard money loans have a lot of advantages over convention home loans or government loans because investors can go to these lenders to get favorable terms and almost immediate cash. David Ebrahimzadeh notes that a hard money loan allows the lender to decide if they think that your project is worth their time.

When you can show a hard money lender that they can get paid back quickly and you will make money on the project, they are more likely to give you the cash you need. A lender like this has very favorable terms because they are assuming that you can get the money back to them quickly. At the same time, you need to have a business model that pays off these loans quickly.

This is why large projects often have expensive units that sell for high prices. One penthouse in a high-rise in a big city can pay off a hard money loan instantly. The hard money lender gets a good percentage back in interest, and both parties can go their separate ways.

Hard money loans are also helpful if you know that you need money to close a deal before someone else takes it. While someone else is waiting for their financing to go through, you can make an offer on the property for all cash, and you can get the project started immediately.

3. Private Loans

Private lenders provide cash when they have extra money to spend. Private lenders could be business associates, family members, colleagues, or people in the community who have extra money. These lenders might give you the money expecting to get it back with little to no interest. At the same time, you might get big loans from your colleagues who will get a commission in return.

For example, someone who uses a small private money loan to buy a house to flip can give their colleague 8% to 10% back for their money. These private money loans are easy to manage if you have good relationships with your colleagues.

Private loans are particularly important for people who are just starting in the industry. You might know someone who owns a real estate company, and they can give you the money you need for a project you believe in. All the money that you make will allow you to make down payments on much larger loans from Fannie Mae or Freddie Mac in the future.

Choose The Best Loan For Your Situation

You must choose the best loan for your situation because each real estate investment plan is different. You can get conventional loans from Freddie Mac or Fannie Mae when you are investing in large buildings. You might also want to get a hard money loan from a big lender who can give you a massive infusion of cash in a short period of time. You can also work with private lenders who can give you the cash you need, and that makes it so much easier for you to complete your projects. You can grow your company, get the money you need, and get favorable terms with any of these loans.