How to Buy Investment Property: Financing Multiple Properties
6 minute read
February 10, 2021


When you or your customer have already invested in one property and are eager to continue, things can get a bit complicated — if you don’t know your options.

If you went with a conventional loan the first time around, you’ve already experienced all of the documentation, strict requirements, and long wait times for review and approval. 

Now, you might wonder where to go from here. With each investment property purchased, you’ll be required to jump through the same hoops once again. In fact, things are going to get even more intense, because transactions with more properties become more of a risk to traditional lenders.

If you’re wondering how to buy investment property without a bank, there is a flexible and creative option to help you keep moving: a private money loan. With a hard money lender, it’s all about the deal. Leveraging their expertise in the industry, a hard money lender will make deals with you based on common sense, not strict government requirements.

Learn what to expect when you want to finance multiple investment properties, and how using a private money loan might be the ideal option.

What’s your loan scenario?

What to expect when financing multiple investment properties

Typically, your challenges increase as the number of properties increase. Most banks don’t want to help finance multiple investment properties because the risks and complications of managing all of those loans for one customer is too much work.

Do you have options with traditional lenders? Definitely, but it’s likely going to be difficult. Government-backed Fannie Mae and Freddie Mac offer options for investors, but the requirements include the following:

  • 25-30% down payments 
  • Excellent credit scores
  • Proof of reserves for protection against vacancies
  • No bankruptcies or foreclosures in the past seven years
  • Two years of tax returns showing rental income from all properties

If you’ve heard about blanket loans, which fund two or more properties within one loan, here’s a word of caution: If one property is defaulted on, the lender might try to claim all properties under the loan. There are also many restrictions and prepayment penalties, which can make it difficult when selling a property.

As a serious property investor, it helps to establish a team of people to help find properties, understand the laws, and secure loans. This team should include your trusted lender, as well as the following:

  • Real estate agents
  • Attorneys
  • Title professionals
  • Property managers

Private money lenders will be a valuable part of the team for brokers and borrowers because they want to establish mutually beneficial long-term relationships. This creates a level of confidence and trust throughout a property investment career.

What is hard money lending and how to use it for real estate investing?

Wondering how to secure investment property financing with a hard money loan? It’s much simpler than the traditional route. Hard money lenders, or private money lenders, don’t have strict requirements to follow. Instead, they make their decisions based on common sense backed by their industry knowledge and expertise. It’s simple: They will evaluate what the properties are worth and how much they can lend based on that.

The biggest benefit of private money loans is the quick turnaround. When it comes to investment properties, you don’t have the time to wait for the traditional process. You have to keep things moving so you can win bids on the desired properties.

Hard money loans are best for short-term projects because the repayment periods usually are one to five years. This makes them perfect for fixing and flipping homes, or to use as short-term funding to get the bid and then refinance later. The numerous options and flexibility of hard money loans make them popular among investors.

Working with a broker or directly with a hard money lender, there are of course going to be requirements to fulfill, but the process will be much faster and smoother. Hard money lenders understand and respect your timing. Your “complex” deals that banks turn away are the everyday deals these types of lenders encounter.

What information will private money lenders require?

The information private money lenders require can vary, including by state. Marquee Funding Group services California, and our team looks at deals on a case-by-case basis. This means documentation requested can vary on any given loan request. However, Marquee can assure you that the qualification is much easier with us than a traditional bank. 

On investment properties there’s no credit score requirement, income requirement, and no need to show “ability-to-repay.”

You also will have to complete our loan application, which asks for the following information:

  • Client type (broker or borrower)
  • Name, email, and phone number
  • Property type
  • Loan type
  • Occupancy
  • Desired loan position
  • Borrow amount
  • Estimated property value
  • Applicant credit score
  • Loan purpose summary

While credit score is not as important to a hard money lender, because the deal is based on a variety of other common-sense factors, it’s still helpful to gauge financial health and how it affects investment goals.

To help you answer the questions in the application, here are the types of loans and borrow amounts Marquee Funding Group offers:

  • Owner-occupied or non-owner-occupied consumer or business purpose loans
  • Single-family, multi-family, commercial, industrial, construction, and land loans
  • Loan amounts from $50,000 to $20 million

Building a valuable relationship with a hard money lender includes being able to ask questions and be transparent about goals and needs. Reaching out to a lender right away, whether you’re ready to submit your application or not, will allow you to get to know the team and their requirements. It also will help you understand their objectives and how they prefer to receive information.

How to submit a successful hard money loan scenario

Based on your initial conversations with your lender, you will get a better understanding of how to submit a hard money loan scenario that suits everyone’s needs. In general, remember to be honest and clear about you or your customer’s goals, which you can include in an executive summary that details the project’s timeline and requested loan amount.

When you include property photos and the required forms of financial documentation, make sure everything is labeled and organized clearly.

If, for example, you’re buying additional rental property, this means you’re doing well with what you already have. Your lender will want to know details about this.

If you’re interested in how to buy investment property in California, Marquee Funding Group is ready to take a look at your deal. To give you the best opportunity to close on that next big project, we close in as little as seven days, and provide same-day approvals.

Contact us today or apply now if you are ready, and we will be in touch soon. We look forward to working with you as you increase your property investments.

Photo by Andrii Ganzevych on Unsplash

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