Private real estate lending covers several types of investment strategies, and each loan type can use a different qualification approach. The financing structure generally depends on what the investor plans to do with the property, whether that involves renovation and resale, long-term rental, construction, or multifamily investment.
Fix-and-flip financing is designed around purchasing and renovating a property before selling it. Lenders may focus on the purchase price, renovation costs, and projected after-repair value. Rental or DSCR financing is designed for buy-and-hold properties and can focus on the relationship between rental income and debt payments. New construction financing can involve a draw schedule tied to construction progress.
Multifamily financing can also be divided according to the property’s stage and investment strategy. Short-term multifamily bridge financing can be used for distressed, under-occupied, or transitional properties, while multifamily term financing is generally associated with stabilized apartment properties. Investors researching hard money lenders for real estate should therefore consider the specific property strategy rather than treating all private real estate loans as the same product.
