As a real estate investor, the right financing can help you grow your property portfolio and boost your returns. However, with so many loan types available, choosing the best one for a particular deal can be challenging.

At ABL, we provide fast, flexible loan options for long- and short-term rentals, fix and flips, new construction, and BRRRR projects. But we’re more than just a lender—We’re a partner who can guide you through the entire investment lifecycle.

What Is an Investment Property Loan?

An investment property loan is a mortgage used to buy (or refinance) real estate to generate a return. This could be a rental property you buy and hold or a distressed property you renovate and sell for a profit.

Either way, an investment property loan reduces how much of your own money you need to commit to a project, lowering your overall risk and increasing your potential returns.

While the most well-known investment property loan type is the conventional mortgage, it’s far from the best option in most situations. For one, conventional mortgages take the longest to process since they heavily weigh your personal credit, income, and other debts. This can cause you to lose valuable time in an industry where deals move fast.

Furthermore, conventional mortgages tend to have strict borrower criteria that could be hard to meet if you’re a business owner with irregular income.

As a result, the best loans for investment properties often come from private lenders like ABL.

Here are the top loan types we offer for investment property:

1. DSCR Loan

A DSCR loan is a loan for financing rental property. It gets its name from the debt service coverage ratio (DSCR), the main criteria by which properties qualify for this type of financing.

Basically, the DSCR measures a property’s ability to cover its debt payments with the rental income it generates. DSCRs of 1 or above mean the property makes enough in rent to cover payments, while anything under 1 means it can’t cover payments.

As a result, many lenders require borrowers to meet a minimum DSCR requirement, such as 1.25. That way, they can mitigate the risk of the borrower falling behind on payments or defaulting on the loan.

At ABL, our DSCR loans have an average DSCR requirement of 1.2. Our goal is for you and your investment to succeed, so we only lend on projects with strong potential while still being flexible to your unique needs and situation.

2. Fix-and-Flip Loan

A fix-and-flip loan is a short-term loan for buying, renovating, and reselling property for a profit. It’s the classic home-flipping strategy. However, conventional lenders don’t finance such projects because they’re subject to stricter lending regulations.

ABL’s fix-and-flip loan is different. It lets you finance both the initial property purchase and renovation costs long enough to resell and use the proceeds to pay off the loan (up to 12 months). Meanwhile, you make interest-only payments to minimize your holding costs during the most capital-intensive project phase.

Plus, ABL fix-and-flip loans can close in days, not weeks, thanks to our streamlined underwriting process. Unlike traditional mortgages, our hard money loans focus on the value of the underlying property more than your personal income or credit. If it’s a good deal, we’ll fund it!

3. New Construction Loan

A new construction loan is a loan for building a new home from the ground up (or tearing down an old home to build a new one in its stead). It’s typically restricted to experienced builders and investors due to the complex nature of constructing a home from scratch.

At ABL, our local loan experts have a deep understanding of the new construction process and can help you get the right loan for your project. We offer new construction loans with loan-to-cost (LTC) ratios of up to 90%, so you can get the capital you need to keep your project moving.

After the new construction loan closes, you’ll get an initial draw. From there, you can make additional draws as you reach agreed-upon construction milestones. Meanwhile, you’ll only need to pay interest on building funds until the project is complete and the property sells (assuming you escrow over $100,000).

4. Cash-out Refinance Loan

A cash-out refinance loan is a loan that lets you borrow against a property you already own to finance another investment. Typically, this means replacing a smaller mortgage with a larger one and keeping the difference as cash.

For example, let’s say you have a $100,000 mortgage on a $300,000 property, leaving you with $200,000 in equity. A cash-out refinance loan from ABL could let you replace the existing $100,000 mortgage with a $200,000 mortgage, leaving $100,000 in equity in the property and letting you pull out the remaining $100,000 in equity as cash. You could then put these funds toward a down payment on another investment property.

Another common strategy that uses cash-out refinance loans is the BRRRR method. The acronym stands for “buy, rehab, rent, refinance, repeat.” This strategy involves buying distressed property at a discount to fix up. But instead of selling the property, you rent it out. From there, you get a cash-out refinance loan to pull out the equity you created during the rehab and use the cash to repeat the BRRRR process from step one with another property.

At ABL, we can support you through the entire BRRRR lifecycle. Use our bridge loan to purchase the distressed property, and then get our cash-out refinance loan to refinance into a long-term rental loan once you’ve completed the renovation and have stable tenants in place.

Just want to refinance an existing property in your portfolio? No problem. Contact our cash-out refinance experts to learn more about our creative refinancing solutions.

5. Blanket Loan

A blanket loan is a single mortgage that finances multiple investment properties. Typically, each property covered under the loan serves as collateral for all the others. This can be a great way to simplify financing if you have many projects going at once, and it could even save you on closing costs. Most blanket loans also have a release clause that lets you sell individual properties without paying off the entire loan.

At ABL, we offer cross-collateralized blanket loan options for fix-and-flips, new construction, cash-out refinances, and rental properties. This gives you more flexibility in how you structure your financing for your real estate investments.

Which Investment Property Loan Type Is Best for You?

The best investment property loan type for your project depends on your investment strategy, timeline, and financial goals. However, here are some basic guidelines:

• For long-term rentals: A DSCR loan is ideal because it focuses on the property’s expected rental income rather than your personal finances.
• For fix and flips: A fix-and-flip loan provides bridge financing to purchase and renovate the property while you make interest-only payments until the final loan payoff.
• For new construction: A new construction loan funds the entire building process, from land acquisition to final sale. Meanwhile, you must only make interest-only payments.
• For accessing equity and BRRRR projects: A cash-out refinance loan lets you unlock capital tied up in an existing property to put toward further investments, or it can help you complete a BRRRR project after renovations are complete and tenants are in place.
• For multiple properties: A blanket loan can consolidate the financing of many projects into one loan for streamlined underwriting and lower closing costs.

Each of these investment property loan types has its pros and cons, so carefully evaluate which best aligns with your project’s purpose, scope, and financial needs. If you’re unsure, ABL’s lending experts are happy to help you determine the best loan type for your situation.

How to Get an Investment Property Loan

Getting an investment property loan is easier than you might think, especially when working with a direct private money lender like ABL. Just follow these steps:

• Decide what loan type you need. Reference the section above to figure out which loan type best suits your project or consult an expert.
• Set a budget. Figure out how much you need to borrow to make your project a success. Use ABL’s loan calculator to speed up the process.
• Get pre-approved. Share basic details about you and the project to get pre-approved for an investment property loan. At ABL, we pre-approve borrowers within 24 hours.

• Review loan terms and apply. Go over the preliminary loan terms outlined in your pre-approval. If they look good, submit a full loan application. This typically requires sharing additional details about the project and supporting documents.
• Close. After the lender approves the loan, you can close (typically at an attorney’s office). At ABL, we can close loans as fast as 10 days!

If you’re ready to get your next real estate investment off the ground, consider partnering with a reliable private lender like ABL. Our fast, flexible loans are some of the best in the industry. We offer a zero-point program, no prepayment penalties, competitive rates, and expert guidance every step of the way. Pre-qualify today!