If you’re considering a real estate investment, know that you will be tapping into a massive market; according to the U.S. Census Bureau, 34% of American households live in rental properties, and 42% of those live in single-family homes. From first-time investors to seasoned pros, one mortgage product is perfect for the savvy investor: the Investor Cash Flow loan.

How do Investor Cash Flow loans work?

Just like other property financing options, but with one big difference: loan approval is based on the projected money a rental property will generate. Not the borrower’s personal financial situation. Not employment records. Not debt-to-income ratios. If you find a property (or multiple properties) that’s a sound investment, chances are you can purchase that property with a Simple Access® Non-QM Investor Cash Flow loan. This mortgage product, which is for properties with one to four units and for loan amounts up to $3.5M, considers the investment’s debt-service coverage ratio (DSCR). And these properties can be single-family homes, condos, mixed-use properties and more – as long as they are potentially profitable.

What kind of real estate investments should you consider?

Let’s look at the most common types and some pros and cons of each.

  • “House Hacking.” The idea here is to buy a multi-unit property, such as a duplex or triplex, live in one unit and rent the other units. The big plus is that your personal mortgage costs are covered by your investment; the downside is living alongside your tenants, likely dealing with more issues than you would if you lived off-site.
  • House Flipping. This strategy is best for investors who have some construction experience, as buying a fixer-upper and transforming it into a dream home is harder than house-flipping TV shows make it appear. On the downside, this can be a risky and time-consuming strategy. But if you know what you are doing, flipping can be profitable.
  • Traditional Rental Property. One of the oldest and most common strategies, buying an apartment or house to rent is so prevalent because it works. Most of the time. Here, you’ll have to decide between a long-term rental, which offers steady revenue each month, and a short-term rental (such as Airbnb) that offers higher short-term profits but more upkeep work.

When you’re ready to talk about expanding your real estate portfolio, our expert loan originators are ready with the right financing. Contact us today!

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