Commonly used by real estate investors for fix and flip renovations, an asset-backed real estate loan is a loan secured by the investment property. Especially useful for short-term projects, asset-based lending for real estate gives you the opportunity to pursue your property goals even if you’re not eligible for a traditional mortgage. As with any loan, it is important to understand how asset-backed financing works and make an informed decision on whether it is right for your project. Choosing the right financing is crucial to the success of your investment – as well as any future investments. It’s equally important to find the right, asset-based, real estate, private lender. Choosing the right private real estate lender means forming a long-term relationship that allows you to have a long career investing in property.

Are Asset Based Loans in Real Estate Right for You?

If you’re a beginner property investor or someone with a less-than-perfect credit score looking to advance your property investing career, an asset-backed real estate loan may be what you need to get a deal over the line. Ultimately, asset-based financing offers speed and flexibility that traditional loans cannot. Since asset-based loans are typically funded by private lenders who aren’t bound by the same rules as banks, they can be used to finance a range of property types and projects for investors from all backgrounds. They require less documentation, making the process faster and easier, however can attract higher interest rates. You also run the risk that if you cannot repay the loan, the lender can take ownership of your asset.

Asset-based finance might be the best option for you, if:

  • You don’t have a great credit history
  • You’re a beginner real estate investor
  • You’re trying to purchase an unconventional property type
  • You’ve been knocked back for a mortgage or traditional loan from banks and other financial institutions
  • You need funding quickly
  • You only need short-term funding
  • You don’t want to spend significant amounts of time filling in paperwork and providing documentation


How to Choose the Right Loan

Choosing the right real estate investor loan is crucial for the success of your investment. Things to consider and questions to ask include:

  • What percentage of the property’s value will the asset-backed lender lend you? Typically, asset-based hard money lenders will provide between 70 and 80% of the asset’s value
  • What down payment is required? Because asset-based loans are deemed riskier than traditional loans, you may be expected to provide a down payment equal to 20% of the property’s value
  • What are the repayment rates and terms? Rates vary from lender to lender, but usually,asset-based lending rates are higher than rates of traditional mortgages. Additionally, rates may be dependent on the specific project and its location so be sure to check when speaking to any potential lenders
  • Are the rates and terms flexible? Many asset-based lenders can be quite flexible when it comes to the rates and terms of the loan, including repayment terms such as frequency as well as other various factors


How to Choose the Right Lender

Not all asset-based real estate private lenders are the same and they don’t all offer the same things. In addition to the questions above, when you are choosing a lender, be sure to compare the services of multiple asset lending companies and see which one best suits your project. It pays to choose a lender who is not only properly certified, highly experienced, and knowledgeable but who specializes in property in the area you are looking to invest.

At RSC CONSULTING LLC a top asset-based lender in the US, our highly trained and skilled loan officers have extensive experience investing in most states across the country. We can offer the insight and knowledge that helps optimize your investment no matter where you are. Asset Based Loans in real estate investing. Find out how hard money private lending helps investors with property acquisition, refinance and rehabilitation.

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