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Hard Money Lender: Buying an Apartment Building

Obtaining apartment building loans can seem like an impossible task, but with this helpful article, real estate investors can learn how to overcome any obstacles.

• Banks – For investors that have substantial access to capital funds, purchasing an apartment building should not be a problem. They can leverage these capital funds to put down a large down payment and satisfy a regular banking institution.
• Home Equity Loan – If an investor has substantial equity in his/her home, applying for a home equity line of credit may be a solution. If the investor does not have this type of equity, it can be a risky investment and tie up personal assets in an apartment building investment. However, if the apartment building sustains promising cash flow and requires minimal repairs, this may be an excellent option to pursue.
• Partnership – Acquiring a business partner is a superb way to pool assets. It is especially important to find a partner that is trustworthy and willing to undergo a significant long-term real estate venture together. Always consider friendships and family beforehand. It is best to forgo any business ventures together if it may cost relationships in the future.
• Hard Money Lender – Hard money lenders quickly provide access to funds as they act as a direct lender. These small businesses or individuals become hard money lenders because they are looking for higher-than-average returns on cash advances. They are willing to overlook the tiny details that often cause many banks to turn down loans, as hard money lenders are look at the overall picture: investment returns. They want to invest in properties that are sound investments and do not invest in the borrower, but in the property. This provides ample room for potential. Additionally, they require far less details, which includes a shorter application process and money is granted almost immediately, instead of waiting the standard 45 to 120 days to close at a traditional bank.
• Option – If an excellent real estate deal presents itself, interested investors may see if they can put an option on the property to prevent others from purchasing it before they can obtain financing. Options can be for a minimal period, such as days, weeks or a month.

There are also different subtypes of apartment loans including long-term apartment loans, which are designed for stabilized properties. These provide better terms over short-term apartment loans for properties that are not yet stabilized. The latter may apply for bridge financing, which helps design creative loans for more challenging situations and offers funding for repairs, rehabilitation and remodeling costs.

Most importantly, work with someone who has experience when purchasing an apartment complex or applying for any type of loan.


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