RENTAL PROPERTY LOAN

Are you looking to diversify your real estate portfolio and generate stable monthly cash flow with a rental property loan? A rental loan, also known as a rental investment loan (or DSCR loan), is the right fit.

With the housing market taking off in 2022, inflation on the rise, and cash flow at premium, now is the right time to invest in rental properties!

 

RENTAL PROPERTY LOAN:

At Capital Funding Financial we are excited about the opportunity to help expand your real estate portfolio through our rental investment loan product.

As a private lender, we are able to offer real estate investors and developers’ turnkey solutions not available through conventional lenders. The leverage and interest rate of your loan is determined by your credit score, experience, and the properties debt service.

Capital Funding Financials’ Rental Loans Provide Real Estate Investors With:

• Competitive interest rates, starting at 4.25%+
• Up to 80% loan-to-value ratio (LTV) or 90% LTC (the lower of the two)
• A Quick and Easy loan application process
• No required income documentation such as tax returns or W2 forms
• Excellent Service
• Fast Closings in 1-3 weeks (versus 45-60 days with a bank)
• Minimum loan amount of $100,000 with a maximum loan amount of $5,000,000+

Why waste time going to a conventional mortgage lender or a bank when you can obtain similar rates a much rapid pace with no tax returns from Capital Funding Financial!

At Capital Funding Financial, we offer variety of rental property loan structures such as a 5/1, 7/1, 10/1, or 30-Year Fixed loans. For investors looking to maximize cash flow, obtain the lowest rate possible, and exit in 3-5 years then a 5/1 will be the best loan product to choose from.

WHAT IS A RENTAL PROPERTY LOAN?

A rental property loan program provides real estate investors with the capital needed to purchase or refinance a property which will be rented out to tenants or used as short-term rentals on Airbnb or Vrbo.

To qualify as a rental, the investment property must be occupied by a tenant or used for short term rentals and not occupied as a primary residence.

Typically, a tenant is occupying the rental property on a long-term basis, but investment property loans can also be used to finance short-term rentals, such as Airbnb, VRBO, and other vacation rentals.

Rental Property Loans are a valuable tool for real estate investors in obtaining long term cash flow.

HOW DOES A RENTAL PROPERTY LOAN DIFFER FROM A CONVENTIONAL MORTGAGE?

You are probably aware that a traditional mortgage can be used to finance a single property – your primary residence. On the other hand, rental loans are used to purchase a real estate investment property, allowing you to generate rental cash flow and benefit from long-term capital appreciation.

While they were traditionally used to purchase commercial properties, rental property loans are now commonly sourced to buy residential rental properties in order to generate rental income for investors.

While a conventional loan program focuses heavily on personal income and credit scores (chattel mortgages), rental property loans take into account the potential for significant rental income generation and rental investment. This is particularly true with private money lenders, sometimes referred to as hard money lenders.

WHAT TYPE OF RENTAL PROPERTIES CAN RENTAL LOANS BE USED FOR?

Rental loans can be used to finance property types such as single-family homes, duplexes, triplexes, quadplexes, multifamily units, townhouses, planned unit developments, and condominiums.

Single-family homes are defined as properties designed to house one family aka one housing unit. Whereas a multifamily home is a residential property containing more than one family. Capital Funding Financials’ rental loans do qualify 1–4-unit residential buildings as “Single-family.”

WHAT TYPE OF INVESTMENT PROPERTIES CAN RENTAL LOANS NOT BE USED TO FINANCE?

The major stipulation for a rental loan program is that the subject property be “non-owner occupied” whereas the property is not the “primary” residence of the Borrower.

At Capital Funding Financial, we do provide rental loan solutions for the purchase or refinance of commercial buildings on our Commercial Loan Program.

RENTAL PROPERTY LOANS VS CONVENTIONAL LOANS – HERE ARE 4 KEY DIFFERENCES:

There are some crucial differences between conventional mortgage loans offered through banks and investment property loans, and these can be particularly challenging for rental investors obtaining financing from a local bank versus a private lender such as Capital Funding Financial.

4 KEY DIFFERENCES:

1. PROPERTY TYPE

To qualify for rental loans, your chosen real estate must fit into qualifying categories: single-family properties, multifamily units, townhouses, planned unit developments, or condominiums. Commercial Office, Retail, Industrial, and Multifamily will fit on Capital Funding Financials’ Commercial Program but not as an asset type on the SFR Rental Program.

2. INTEREST RATES

Interest rates and fees are typically higher on an investment property given investment properties are perceived to have more risk due to the speculation. However the gap between conventional and rental investment loan rates has shrunk in the last year as capital markets have opened up in their appetite in purchasing rental investment loans.

3. DOWN PAYMENT

Conventional Lenders or Banks often require a larger down payment requirement or much higher DSCR to secure an investment property loan.

4. CREDIT

High Credit Score Requirements along with a low debt to income ratio is required for conventional bank rental loans.

WHY CHOOSE A PRIVATE MONEY LENDER FOR A RENTAL INVESTMENT PROPERTY?

Are you wondering how you can benefit from turning to a private lender rather than traditional banks?

SPEED, RELIABILITY, AND HIGHER LEVERAGE!

Apply Now

 

Private lenders can benefit you by offering:

• Low Rates starting in the 4’s
• More flexible loan terms than traditional banks conventional loans
• A faster turnaround approval process
• No document loans = no pay stubs, tax returns, or W2’s
• Loans customized to your rental portfolio
• Higher leverage and Lower down payments
• Rental portfolio loans to finance multiple rental properties also known as a Blanket Loan

Private money lenders typically offer interest-only loans, meaning that a monthly mortgage payment covers the interest, and the balance of the loan is payable at the end of the term. A prepayment penalty will be due if the balance of the loan is paid off before a predefined milestone date.

IS A PRIVATE MONEY LENDER RIGHT FOR YOU?

If you are looking to invest in a non-owner-occupied rental property to boost your cash flow, a private money lender can help you to gain access to capital more quickly than a conventional lender or bank.

Private lenders are a great option if you need fast access to cash flow, have a poor credit history, issues with your income verification, or have a high debt to income ratio!

You may have had enough of dealing with conventional lenders, such as banks and credit unions, due to inefficiency. It can feel as though you are constantly jumping through hoops to provide the required documentation and meet the stringent governmental regulations.

As a direct lender, Capital Funding Financial has cut out the middleman, allowing us to offer you the lowest cost of capital out there!

HOW DOES THE RENTAL PROPERTY LOAN APPLICATION PROCESS WORK?

We offer a convenient loan application process that is available through our loan portal which can be e-signed via DocuSign. Upon receipt of the rental loan application, we will schedule a follow-up call to go through the particular facts regarding your loan submission.

During the rental property loan application process we will ask questions about your experience with rental properties and your estimated credit & income. However, we will not require any formal tax returns or W2’s in qualifying you for the loan.

WHAT LOAN DOCUMENTATION DO YOU NEED TO QUALFY FOR A RENTAL PROPERTY LOAN?

For Purchase Transactions:

• Loan Application & Disclosures
• Driver’s License or Passport (ITIN number if you are a Foreign National)
• Purchase Agreement and any addendum(s)
• Proof of Earnest Money Deposit with check or wire receipt
• 2 Months Bank Statements to show the necessary cash to close and liquidity
• Entity Docs – Articles of organization, Operating agreement or Bylaws, EIN #, CDD Form, Corporate Resolution
• ACH Setup Form
• Title Commitment, Survey, HOA/Condo Questionnaire (if applicable), E&O, Wire Instructions, Confirmation of GAP Coverage, CPL, Draft Deed, HUD
• Evidence of Insurance – RCE/Insurable Value Required for Dwelling Coverage and 6 Months Loss of Rent Coverage
• Appraisal Payment (Appraisal to be Ordered by Capital Funding Financial)
• Lease Agreement (if applicable)

For Refinance Transactions:

• Loan Application & Disclosures
• Driver’s License or Passport (ITIN number if you are a Foreign National)
• Payoff Statement or Mortgage Statement (if applicable)
• 1 Months Bank Statement to show current liquidity
• Entity Docs – Articles of organization, Operating agreement or Bylaws, EIN #, CDD Form, Corporate Resolution
• ACH Setup Form
• Title Commitment, Survey, HOA/Condo Questionnaire (if applicable), E&O, Wire Instructions, Confirmation of GAP Coverage, CPL, HUD
• Evidence of Insurance – RCE/Insurable Value Required for Dwelling Coverage and 6 Months Loss of Rent Coverage
• Appraisal Payment (Appraisal to be Ordered by Capital Funding Financial)
• Lease Agreement (if applicable)

HOW LONG DOES THE RENTAL PROPERTY LOAN PROCESS TAKE TO CLOSE?

Once we have received the Appraisal, Title Commitment, and Insurance we will the loan to Final Underwriting. Upon review of the loan file by our Underwriter, we will submit to Legal for Loan Documents pending any Clear to Close Conditions.

At Capital Funding Financial, we close loans in 1/3 of the time it takes to close a conventional mortgage loan! Our quick and easy loan process eliminates the stress and hassle that has plagued the mortgage lending industry for years. You will be able to leverage your capital, grow your portfolio, and enjoy better cash flow using Capital Funding Financials’ rental loan program!

Rental Property Loans Custom Built for Real Estate Investors

F.A.Q.

CAN I OBTAIN A RENTAL INVESTMENT PROPERTY LOAN WITH BAD CREDIT?

Yes! While a good FICO score is 700+, at Capital Funding Financial we only require a mid-credit score (FICO) of 600 to qualify for a rental loan.

ARE RENTAL PROPERTY LOANS SUBJECT TO EARLY PREPAYMENT PENALTIES?

Yes, if you payoff your rental loan it is subject to a prepayment premium based on the following:

• 5/1 ARM: The prepayment premium structure is 3% in Year 1, 2% in Year 2, 1% in Year 3, and No Prepayment after Year 3.
• 7/1 ARM: The prepayment premium structure is 4% in Year 1, 3% in Year 2, 2% in Year 3, and 1% in year 4, and No Prepayment after Year 4.
• 10/1 ARM: The prepayment premium structure is 5% in Year 1, 4% in Year 2, 3% in Year 3, and 2% in year 4, 1% in Year 5, and No Prepayment after Year 5.
• 30 YEAR FIXED: The prepayment premium structure is 5% in Year 1, 4% in Year 2, 3% in Year 3, and 2% in year 4, 1% in Year 5, and No Prepayment after Year 5.

WHY CAPITAL FUNDING FINANCIAL?

Partner with Capital Funding Financial on your next rental loan, fix & flip loan, or ground up construction loan. We have been investors in real estate for over 30 years both on the debt and equity side with over 1,000 Single Family Developments built across the US & Canada by our affiliated family office.

Therefore, we have the experience, the capital, and the knowledge to assist you in growing your Real Estate Portfolio! When you choose us as your Lending Partner you are able to avoid any additional fees as we process, underwrite, and close all of our loans in-house.

Capital Funding Financial seeks to establish a long-lasting relationship as we help you create your Real Estate Legacy for you and your family!

Apply Now

Call us at: 954-320-0242

Email us at: [email protected]