Financing TipsThe 6 Best Real Estate Investment Loans in 2021 by Alex Karani April 10, 2021April 8, 2021 by Alex Karani April 10, 2021April 8, 2021If you are looking to get into real estate investing in 2021, you’ll probably need to take out an investment loan to make the purchase. Buying investment property takes a lot of money, and not many people can afford to buy all-cash. The good thing with real estate is that you can build your own investment portfolio by leveraging other people’s money. Generally, investment property loans are more expensive to take out and harder to qualify for than home loans because lenders consider investment properties to be of a higher level of risk. So what real estate investment loans are best for home investors in 2021?Related: Can Anyone Get a Loan for Rental Property? What Does It Take?Here 6 real estate loans for investment property you should consider:1. Conventional Mortgage LoansOne of the best investment property loans for buying rental property in 2021 is conventional loans. These are long term loans offered by traditional lenders like banks and credit unions and are not guaranteed by the federal government. Taking a mortgage for rental property would be a great move because they have lower interest rates and fees than other real estate loans. Moreover, mortgage rates for investment property plummeted to historic lows as a result of the ongoing COVID-19 pandemic and are likely to remain low this year. This means that investors will have lower monthly mortgage payments. However, a mortgage for investment property usually has more stringent credit and income requirements than other types of real estate investment loans. If you have recently lost your job or have had your income heavily impacted by the Coronavirus, it may be difficult for you to qualify for a mortgage. Nevertheless, if you have a steady income, a good credit, and a high enough down payment (the minimum requirement for rental properties is 20% of the sales price), you may be able to secure an ultra-low mortgage rate in 2021.2. Federal Housing Authority (FHA) LoansFHA mortgage loans are one of the best real estate investment loansIf you are looking to buy rental property for the first time and can’t qualify for a conventional mortgage, an FHA loan may be a great option. Because these real estate investment loans are backed by the government, they are usually more lenient with regard to down payment and credit score requirements than conventional mortgages. However, one can only qualify for an FHA loan to buy a 2-4 unit multifamily property and occupy one of the units for a minimum of 12 months. That’s what makes this type if investment loans well fit for the house hacking strategy.Related: Can You Use FHA Loan for Investment Property Financing?3. Home Equity Loans and Home Equity Lines of Credit (HELOCs)One of the few bright spots during the COVID-19 pandemic is that property values have soared in recent months. If you are a homeowner and have no up-front funds, you can draw on the equity accumulated in your existing home to finance the purchase of another investment property. Normally, you can borrow up to 80% of your home equity value, which makes this strategy one of the best real estate investment loans in 2021.For home investors looking to convert home equity into cash, there are normally two options available: home equity loan and home equity line of credit (HELOC). With a home equity loan, the borrower is given one lump sum upfront, usually at a fixed interest rate. On the other hand, a HELOC on investment property allows the borrower to tap into the equity in his/her home whenever needed up to a pre-set limit, much like a credit card. It usually has a variable interest rate.4. Hard Money LoansHard money loans are investment real estate loans issued by individuals or companies. Hard money lenders lend mainly based on collateral. Therefore, credit and income are usually not considered. If you have income and/or credit issues, these real estate investment loans are easier to qualify for. Another advantage of hard money loans is faster approval and funding compared to traditional mortgages. They can be approved within one or two days. The main drawback of these loans is that they are expensive. You should be ready to deal with high interest rates and more fees. For this reason, they are typically great for short-term fix-and-flip loans. It doesn’t make sound financial sense to use them for long-term rental loans.Related: When Are Hard Money Loans for Rental Property a Good Idea?5. Private Money LoansBorrowing short-term loans from family and friends is another great investment property financing option to consider in 2021. However, it requires trust, confidence, and experience. For you to get these real estate investment loans, you need a proven track record of success as a real estate investor. You have the advantage of negotiating your own loan terms and fees. This flexibility makes them cheaper than other investment loans for real estate. However, keep in mind that your personal relationship with the lender may be affected if things don’t work out and you default. 6. Online Portfolio Loans There are a number of online lending platforms that offer a variety of loans for real estate investors such as hard money loans and rental loans. Two examples of such online lenders are LendingOne and LendingHome. Online lenders typically allow you to make your loan application and track the status of your application online. They are usually more flexible than rigid conventional mortgage lenders. However, their flexibility may be less than that of local hard money lenders. They require less income documentation as the property is used as collateral. Loan approval is also relatively fast compared to other real estate investment loans.One major drawback of online lenders is that they are more expensive than conventional lenders. All in all, they represent a good balance of speed, flexibility, and cost. While they can be an excellent method of financing investment property in 2021, be sure to vet them carefully. The Bottom LineIf you are thinking of buying real estate in 2021 with little or no money of your own, there are several real estate investment loans to choose from. However, the best investment loan for you will heavily depend on your situation. For instance, it may depend on how you earn your income (self-employed or employed), current financial situation, credit history, and whether you are already a homeowner or not. Whatever investment loan you decide to take, be sure to shop around for the best interest rates, terms, closing costs, and other fees. This is because your financing costs will have a huge impact on your return on investment. If you are investing in the 2021 US housing market, the best way to know how your investment property mortgage will affect your cash flow and cash on cash return is to use Mashvisor’s mortgage calculator. This interactive tool is a unique feature of Mashvisor’s investment property calculator, which is a software that allows you to conduct an in-depth analysis of any rental property for sale in the US housing market. The mortgage calculator shows changes in cash flow and cash on cash return depending on the mortgage details added.Mashvisor’s Mortgage Calculator Try Our Morgage Calculator for FreeTo get access to our real estate investment tools, click here to sign up for a 7-day free trial of Mashvisor today and enjoy 15% off for life. Start Your Investment Property Search! START FREE TRIAL Down PaymentFHA LoanFinancingHard Money LendersMortgagePrivate Money Lenders 0FacebookTwitterGoogle +PinterestLinkedin Alex KaraniAlex is an entrepreneur and an experienced content writer focused on personal finance, business, and investing. For over six years, he has contributed to a number of publications, both online and print. When he's not writing or working, Alex enjoys reading, traveling, and the outdoors. Previous Post BRRRR Method: Is This Still a Viable Real Estate Investment Strategy in 2021? Next Post Land Trusts: The Smart Investor’s Secret Weapon Related Posts Real Estate Basics: How to Buy a Duplex with No Money Down Flipping Houses with No Money Can Be Done! Here’s How Investment Property Mortgage Rates 2021 Forecast Multifamily Financing: All You Need to Know How to Refinance Investment Property to Buy Another What Are the Best Ways for Financing Investment Properties? 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