How to Get Apartment Flipping Loans

A recent report has found that it is less expensive to buy a home than it is to rent in 42 US states. Despite this fact, more people are choosing to rent. In fact, apartment vacancy rates are the lowest that they’ve been since 1985.

From June to July rents spiked 15%, and still people are choosing apartments over houses. This is excellent news for buy and hold real estate investors. Many investors are making the switch from house flipping to apartment flipping because it allows them to make monthly income from their tenants while also watching their property value go up.

Of course, buying and holding apartment complexes is a very different beast from flipping houses. Even experienced investors can’t just jump into a buy and hold strategy without doing research and some self-educating first. But the time and energy required to be successful at buying and holding apartments is well worth it, particularly in the current climate.

In your research into rental real estate investing, the first thing you’ll learn is that you can make much better margins and make your investment more secure by utilizing buy and hold loans.

Banks are rarely willing to get involved with buy and hold investments. The costs are simply too high, and banks are not able to act quickly enough to make effective partners. At the other end of the spectrum, hard money lenders are rarely reputable enough to be advisable and often demand excessively high interest rates.

That’s why many buy and hold investors prefer to work with private money lenders, whether those lenders be personal friends, business partners, or licensed brokers. Private money gives investors flexibility, security, and cash flow, all of which are essential when investing in apartment complexes.

When choosing a private money lender, be sure to do your due diligence. Don’t simply trust someone based on a handshake agreement. Lay out your terms in writing, and have any agreement checked over by an accountant or a lawyer.

If you’re working with a licensed broker, check their rating with the Better Business Bureau and speak to their other clients. Pay attention to how they interact with you. Are they always pushing to close the deal, or are they willing to go at your pace? Do they seem interested in fostering a long-term partnership or simply making a one-time agreement?

With private money lenders, your experience and past successes should affect both the size of loan that you can obtain and the terms. Use your experience to your advantage, and don’t be afraid to negotiate. Compare apartment flipping loans from a few different lenders to see what your options are. At ZINC Financial, for example, buy and hold loans for apartment complexes are available in amounts up to $10,000,000 with rates starting at 6.99%.

You should also be prepared to invest at least some of your own money in your buy and hold property. Most private money lenders will see this as an act of good faith, an indicator that you are serious about making the most of this investment.