investment Loan Programs
investment Loan Programs
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Investing in Real Estate?
Investing in Real Estate?
Whether it is a second home or an investment property, start your investment buying with confidence!
Whether it is a second home or an investment property, start your investment buying with confidence!
Synergy Capital Lending, Inc. is well-versed in investment financing and we are ready to work with you.
Synergy Capital Lending, Inc. is well-versed in investment financing and we are ready to work with you.
Investing in Real Estate can be very rewarding, but it is important to minimize risk however possible. Our Investment Specialist will work with you to ensure not only the financing is most appropriate but we will also provide insight and advice on the investment effectiveness of various types of properties.
Second Home vs. Investment Property
Second Home vs. Investment Property
A second home is a one-unit property that you intend to live in for at least part of the year or visit on a regular basis.
Investment properties are typically purchased for generating rental income and are occupied by tenants for the majority of the year.
Reasons for owning a second home
Reasons for owning a second home
There are many reasons to own a second home, some of which have financial benefits. With the rise of home-sharing and rental platforms like Airbnb and VRBO, owning a second home offers a way to generate passive income.
Owning a second home allows for diversifying your assets beyond the usual stocks and 401(k) plan.
Financial benefits aside, a second home can offer a place to have quality time with your family and ensures that you always have a vacation destination.
primary vs. second home Mortgage
primary vs. second home Mortgage
On a primary mortgage, you might be able to put as little as 5% down, depending on your credit score and other factors.
On a second home, however, you will likely need to put down at least 10%. Because a second mortgage generally adds more financial pressure for a homebuyer, lenders typically look for a slightly higher credit score on a second mortgage. Your interest rate on a second mortgage may also be higher than on your primary mortgage.
Otherwise, the process of applying for a second home mortgage is similar to that of a primary residence mortgage.
What is a Hard Money Loan (HML)?
What is a Hard Money Loan (HML)?
A hard money loan is a type of short-term financing that is typically used for real estate investment properties. This kind of loan is often called a "low LTV" or "asset-based" hard money loan.
Unlike traditional loans, which are underwritten based on the borrower's creditworthiness and income, hard money loans are underwritten based on the value of the property being used as collateral.
Hard money loans can be a good option for investors who need financing quickly or who may not qualify for traditional loans. However, they often come with higher interest rates and fees, as well as shorter repayment terms. Borrowers should carefully consider the costs and risks of a hard money loan before proceeding.
A Hard Money Loan typically has the following features:
A Hard Money Loan typically has the following features:
60% loan to value or less:
60% loan to value or less:
The lender will typically only lend up to 60% of the appraised value of the property, in order to minimize their risk in case of default.
Investment property:
Investment property:
These loans are typically used to finance non-owner-occupied properties, such as rental properties or fix-and-flip projects.
No FICO or income documentation required:
No FICO or income documentation required:
The borrower's credit score and income are not typically a factor in the underwriting process. Instead, the lender will look at the value of the property and the borrower's equity in it.
No appraisal required in most cases:
No appraisal required in most cases:
Some hard money lenders may not require an appraisal, instead relying on their own valuation of the property or a broker's price opinion
What is a Debt Service Coverage Ratio Loan?
What is a Debt Service Coverage Ratio Loan?
A DSCR (Debt Service Coverage Ratio) loan is a type of commercial real estate loan that is underwritten based on the cash flow of the property. This means that instead of focusing primarily on the creditworthiness of the borrower, as with a traditional commercial loan, the lender evaluates the property's ability to generate sufficient income to cover the loan payments.
To determine whether a property is eligible for a DSCR loan, the lender will calculate the DSCR, which is the property's net operating income divided by the debt service (principal and interest) of the loan. Typically, lenders require a minimum DSCR of 1.2 to 1.5, meaning that the property's net operating income must be at least 1.2 to 1.5 times greater than the debt service of the loan.
DSCR loans are often used to finance income-generating properties, such as apartment buildings, office buildings, and shopping centers. They can be a good option for borrowers who may not qualify for traditional commercial loans, but who have a property with strong cash flow.
It's important to note that DSCR loans may have higher interest rates and stricter underwriting requirements than traditional commercial loans, and they may require a larger down payment or more collateral. However, they can be a valuable financing tool for borrowers who have strong cash flow from their properties.
Dustin Fritz
Owner/Broker
850 Iron Point Rd.,
Suite #212,
Folsom, CA 95630
Office: (916) 459-1158
Cell: (916) 320-6845
Fax: (916) 258-0947
Company NMLS #8580, NMLS Consumer Access / CA BRE: 01867225 / ID Lic. #NBL-2080008580 / WA Lic. #CL-8580. License held in: CA, TX, ID, WA
For informational purposes only. No guarantee of accuracy is expressed or implied. Programs shown may not include all options or pricing structures. Rates, terms, programs and underwriting policies subject to change without notice. This is not an offer to extend credit or a commitment to lend. All loans subject to underwriting approval. Some products may not be available in all states and restrictions may apply.
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