Fund Your Next Investment Property with Real Estate Financing from Upwise
As an investor, there are a few different ways to go about financing real estate investments. Each one will have its own set of pros and cons, and your financing approach will depend on the property and the situation. For investors, it’s important to remember that not all financing options are created equal. What works for someone else may not necessarily work for you, but the trick is understanding which real estate financing option will compliment your business strategy. Let us guide you and compare the best real estate financing options.
What is Real Estate Financing?
An asset-based loan is secured by assets instead of emphasizing cash flow, which is typically real estate or whatever assets a business has on its balance sheet. The lender will use collateral that can be quickly and easily liquidated. Assets can also be accounts receivables, equipment, land, crop, purchase orders, and inventory. Asset-backed loans secured by collateral offered by Upwise are most often structured as term loans and revolving lines of credit.
Real Estate Financing Details
$150K - $200M
1 - 30 Years Ammortization
6% - 12%
As Fast As 2 Weeks
Real Estate Financing Pros vs Cons
PROS
- Interest Only & Monthly Payments
- Only Pay Interest on the Funds you Draw
- Larger Loan Sizes
- Credit & Revenue are NOT the Main Deciding Factor
- Access to Capital for the Lifetime of your Business Assets
CONS
- May Require an Appraisal and Upfront Due Diligence Costs
- Higher Rates for Lower Credit Scores
- Most Likely will Require Personal Guarantee & Collateral
- Risk Losing your Assets in the Event of a Default
- Loans Are Based on the Asset Value and Not Cash Flow
How Does a Real Estate Loan Work?
Most borrowers turn to asset-based lending because they’ve had bad luck getting approved by traditional cash flow-based lenders or they want a cheaper cost of capital and confidence in their ability to pay back the loan. In asset-based lending, tangible collateral serves as the most important aspect of the approval process. Borrowers will use an asset for more favorable terms typically resulting in a higher loan approval and lower interest rate.
The loan amount is determined by the market value of your assets. Typically, most lenders will lend 75 to 85% of the value of their accounts receivables, and around 50% of the cost of their inventory or equipment. Also 70% to 90% on the market value of the property and typically 50% of the value of raw land.
So, if you have assets that you would like to leverage as collateral for more favorable terms, then this may be the best choice for you.
Real Estate Finance Requirements
Received 80% LTV
Over 620+
None
Valued over $150K
* Note: These real estate financing requirements are based on previous Upwise customers and is just an average.
What Do Real Estate Loans Cost?
You should know how much the cost of capital will cost you no matter what type of financing you’re applying for.
Let’s take a look at a cost example.
Example of a Real Estate / Asset-Backed Loan
Let’s say you have a commercial property that you operate your business out of, that is worth approximately $1.1 Million.
In most cases, the lender will require you to get an appraisal done to determine the value of your property.
Let’s say the property’s appraised cost was determined to be $1 Million. In this scenario, Upwise will be able to lend 80% LTV based on the appraised value of the property. Meaning the loan size will be $800k based on the appraised cost of the asset.
The term length will determine the monthly payment and amortization schedule. Payments can be interest only, principal and interest rate, deferred, and an interest reserve may be required.
Consider other fees associated with asset-based loans as well. These fees include but may not be limited to appraisal fees, site survey fees, legal fees, escrow fees, origination fees, packaging fees, prepayment fee, and others.
Don’t overlook fees on your loan offer—be sure to factor in any and all small fees you might have to pay in order to understand the true cost of your asset-based loan.
In order to understand your loan completely, make sure to ask Upwise for an amortization schedule. All fees associated with the proposal will be transparently laid out for each borrower in a term sheet. For more information, please call (646) 837-5522 to speak with an Upwise Real Estate Financing Specialist.
How to get a Loan for Investment Property
We make it easy, simply apply online and we’ll be in touch to go over your options.
Safe & Secure
Documents You'll Need to Apply
- Completed Application
- Driver’s License
- Voided Business Check
- Business Bank Statements (Last 6 Months)
- Property Information
- Property Deed
- Balance sheet
- Profit & Loss Statements
- Business Tax Returns
- Personal Tax Returns
*See above for real estate loan requirements.
Types of Real Estate Investment Financing
Loan Types
- Purchase
- Fix & Flips
- Refinance
- New Construction
- Hard Money Loan
- Cash Out Refinance
- Bridge & Mezzanine
- Raw Land
- Line of Credit
- Condo & Hotel Projects
- Non-Recourse
- Bank Turndowns
- Quick Closings
- Vacant Properties
- Distressed Locations
- In Default, Foreclosure
- Chapter 11 Exits
- Renovation
Property Types
- Residential Investment
- Commercial Properties
- Industrial
- Vacant Land
- Spec or Investment Homes
- Condominiums
- Multifamily
- Retail
- Mixed Land Use Property
- Hotels
- Office Space
- Single Family/ Multiple Tenant
- Special Use
- Farmland & Greenhouse
- New Developments
- Abated
- State or Municipal Property
- Foreclosure or Distressed
Recent Investment Loans for Real Estate
Single-Family Residential
South Hampton, NY
Commercial Development
Dallas, TX
Cash Out Refinance
Denver, CO
Real Estate Financing
One of the biggest misconceptions of real estate investing is that you need to have lot of money to get started, which simply isn’t true. The secret that many professionals don’t understand, is the fact that there are a number of different real estate financing options available to fund every investment. Because the method in which a specific deal is funded can greatly impact its outcome, understanding the financing aspect is imperative.