Investment Property Financing Flashcards
7 cards from real Real Estate Investing practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Investment Property Financing flashcards as text
What is the typical minimum down payment required for a conventional investment property loan?
Answer: 20%
Conventional lenders typically require at least 20% down for investment properties, compared to 3-5% for primary residences.
A DSCR (Debt Service Coverage Ratio) loan qualifies borrowers primarily based on:
Answer: The property's rental income relative to its debt payments
DSCR loans evaluate whether the property's rental income is sufficient to cover the mortgage payment, making them ideal for self-employed investors.
Which loan type is BEST suited for an investor who wants to purchase, renovate, and quickly sell a property?
Answer: Hard money loan
Hard money loans offer fast funding and short terms (6-24 months), making them ideal for fix-and-flip projects despite their higher interest rates.
What does it mean when a lender 'calls' a loan?
Answer: They require the full balance to be repaid immediately
A loan call provision allows the lender to demand full repayment of the outstanding balance before the loan's maturity date.
An investor uses a blanket mortgage to:
Answer: Secure multiple properties under one loan
A blanket mortgage covers multiple properties under a single loan, simplifying financing for portfolio investors.
What is a 'non-warrantable' condo and how does it affect financing?
Answer: A condo not meeting Fannie/Freddie guidelines; harder to finance conventionally
Non-warrantable condos fail Fannie Mae/Freddie Mac guidelines (e.g., too many units rented, pending litigation), forcing investors to seek portfolio or commercial loans.
Which of the following is an example of 'creative financing' in real estate investing?
Answer: Seller carrying back a second mortgage
Seller carry-back financing, where the seller acts as the lender for part of the purchase price, is a classic creative financing technique.
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