Here are seven options to consider for funding your investment property purchase or upgrade.
Home improvement loan For the most part, getting a home improvement loan makes sense if you’re upgrading something you’ll keep for the long term.
Home improvement loans also can be useful for income-producing properties.
As with a home improvement loan, it’s possible to get a line of credit based on your long-term investment property.
“That can make getting a home improvement loan impractical for any real estate investor.” The downside to using a home equity line of credit from your primary residence or your rental property is that you are putting your investment at risk.
Instead, he pointed out, many real estate investors turn to more creative home loan solutions such as hard money lending.
“This is used a lot by investors who flip homes,” said Machado.
You could lose that money if you can’t make payments and the seller repossesses the home.
Personal loan Is your home improvement project relatively small?
Whether you need a home improvement loan to upgrade a revenue-producing rental property or you hope to buy a home to flip it, research your options and decide which one works best for you.