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Can I Use A Hard Money Loan For Rent-To-Own Investment Properties?

If you're a qualified Borrower and The Deal Itself looks good, it should be pretty easy. In fact, it probably won't matter much whether you intend to offer the property on a Rent-to-Own basis, or just a more standard lease.

We've seen investors in a variety of local markets have success with Rent-To-Own properties, especially if the Borrower already has:

  • adequate income and/or
  • liquid cash reserves.

These will be crucial to help weather the early stages when 2 vacant units could be 50% vacancy for a hypothetical 4 unit portfolio (in case a rent-to-owner or two opts out).

Types Of Hard Money Loans To Use For Rent-To-Own Investments

If the property is move-in ready upon purchase, or if you're looking to refinance an existing rental property, you'll most likely be seeking a Buy & Hold Single Family Rental loan, which can range up to 30+ years in term and have some of the lowest interest rates available. Depending on the specific scenario, you might not even need to disclose whether you're doing rent-to-own or a more standard lease when securing this type of financing.

If you're acquiring a property that requires repairs & upgrades before it's ready for the new rent-to-owner, you might also start with a ~12 month Single Family Fix & Flip loan to start, then refi into a longer-term option.