How To Get Cash Out of Your Investment Property With No Income Documentation

As investment values increase in many areas, savvy real estate investors recognize the opportunity to tap into their property’s equity. A cash-out refinance on investment property is one of the best opportunities to make the most out of this situation. There are countless uses for those funds — home improvement projects, adding new property, or managing other financial needs unrelated to the property itself. Depending on the amount of equity, you could see a significant amount of financial improvement, especially with a cash-out refinance with no income documentation.

How does a cash-out refinance on investment property work?

A cash-out refinance allows the property owner to secure a new mortgage on the property for more than they currently owe on it. They then receive the difference (new mortgage amount minus what is owed and closing costs). Using a real estate investment, it’s possible to capture funds during these high home value times to use to advance your portfolio or simply lock in low rates for other needs.

Why use a cash-out refi?

Many property owners, including investors, have equity in their real estate that they don’t tap into and use as readily as they should. Yet, they may be paying a much higher interest rate on unsecured debt or battling financial difficulties in managing their investment business. Interest rates on real estate are competitive — and the same goes for cash-out refinancing. Taking advantage of those funds now may help to make your financial future a bit stronger.

What are the details and specs of a cash-out refinance on an investment property?

If it is time to improve your cash reserves through a cash-out refinance loan, here’s what you can expect from us:

•      Get up to 75 percent loan-to-value on your home – no reserves required

•      You may not need any employment or income documentation to secure these funds.

•      Boost investor cash flow to use as you need.

•      Borrow up to $2 million

•      30-year fixed loan (no bothersome adjustable-rate mortgages to worry about)

You can use this type of loan on most types of real estate, making it more accessible to many real estate investors. That includes:

•      Single-family residences

•      2-to-4-unit condos, townhomes, and non-warrantable condos

•      Non-owner-occupied properties only (cannot be used on primary residences)

There are a few other things to know about a cash-out refinance on investment property. For example, to qualify on cash flow, you’ll need 12 months reserves for negative cash flow. The cash-out can be used to cover reserves.

What can you do with a cash-out refinance loan right now?

Expand your horizons when you consider all the potential options for using these loans to meet your needs. Many times, property owners use these funds to put value back into their investment properties. You can do this in many ways, including home improvements. Get the property in better shape so you can attract a higher-paying tenant. It may be possible to use these funds to expand the existing property’s footprint through an addition. That may allow investors to increase their rental opportunities.

Other investors use these funds to invest in another property. Buying another rental property with a low interest rate and low monthly payment using these funds simply makes sense for many people. It is one of the best ways to expand a real estate portfolio in current conditions.

Pay down personal debt with these loans. While mortgage payments may continue for a bit longer on the property, you may be able to comprehensively pay down your debt outside of that loan. Doing so may save you money since interest rates tend to be much lower on a cash-out refi than personal, unsecured debt.

Use the funds in any way that fits your needs right now. Tuck them away for the future. Know that a cash-out refinance loan is one of the most effective ways of utilizing the value of your property.

The Benefits of Using Unsecured Business Purpose Loans

For many small businesses, obtaining a business loan can be quite difficult as many small business owners don’t have the collateral to pledge for a traditional secured loan. Therefore, unsecured business purpose loans are often a better option. While unsecured business loans are often tougher to qualify for and can carry higher interest rates than secured loans, they ultimately hold less risk for borrowers. 

Below, you’ll learn more about the benefits of using unsecured business purpose loans, how unsecured business loans work, and the steps you can take to obtain an unsecured business loan today. 

Understanding Unsecured Business Loans 

Essentially, unsecured business loans work in a similar manner as traditional secured business loans. However, the main difference is that borrowers are not required to offer a form of collateral with an unsecured business loan. But, as with any loan, there are pros and cons to securing this type of funding for your small business financing needs.

Pros of Unsecured Business Loans 

  • They can be easy to obtain because they typically offer a faster application process compared to secured business loans. 
  • Unsecured business loans can offer a quick approval time, with some lenders approving unsecured business loan applications in as little as 24 hours. 
  • There are often fewer restrictions associated with unsecured business loans. 
  • There’s less fear surrounding property loss as lenders must have a court order to take business or personal property if an unsecured business loan isn’t paid. 
  • If your business files for bankruptcy, courts often discharge unsecured loans, whereas secured loans are typically not discharged. 

Cons of Unsecured Business Loans 

  • Lenders typically require personal guarantees. This means that the owner of the business signs an agreement in which they agree to personally repay the loan if the business is unable to do so. 
  • Unsecured business loans are often riskier for lenders since they do not have collateral such as real estate to secure the loan, which typically causes these types of loans to have a higher interest rate. 
  • With unsecured business loans, the repayment terms are often shorter, and they may require more frequent payments.
  • Qualification for an unsecured business loan often has much stricter qualification requirements and can be difficult to obtain, especially if you or your business have a low credit score. If you don’t qualify for an unsecured business loan, you might want to look into other financing such as lines of credit, a merchant cash advance, or other business credit cards..  

Now that you know what an unsecured business loan is and its pros and cons, let’s look at how unsecured business loans work.

How Do Unsecured Business Loans Work? 

Unsecured business finance options work like traditional types of secured debt financing. However, with unsecured business loans, borrowers are not required to provide lenders with any form of collateral. Overall, instead of looking at the borrower’s collateral, lenders look at the borrower’s creditworthiness. Generally, you must have a minimum credit score of 680 for a bank to consider you for an unsecured business loan.  Lenders also look at the loan amount and the business’s cash flow to determine whether the business is a good risk in terms of providing a loan. 

Steps to Obtain an Unsecured Business Loan 

To obtain an unsecured business loan, you will need to follow certain steps to make sure you are even eligible to apply. The following includes some of the criteria you will need to meet in order to qualify for an unsecured loan from a bank. 

  • You will need to have multiple years of documentation for your business. 
  • It is in your favor to have a strong personal credit score. 
  • You should have an excellent annual revenue as banks examine this element before granting a loan. 

Once you have determined if you meet the criteria of the three elements mentioned above, you can then start the process of obtaining an unsecured business loan from the financial institution of your choice. It is also beneficial to create a detailed business plan before seeking an unsecured business loan from a bank or other financial institution. 

In your business plan, be sure to include:

  • A company description
  • What products or services your business sells
  • The management structure of your business
  • An analysis of the industry your business is in
  • A SWOT analysis of your business
  • Any other vital information regarding your business

When applying for an unsecured business loan, keep in mind that the most likely place to obtain this type of loan is from an alternative lender rather than a traditional bank. Popular alternative lenders are financial technology firms that use automated technology to determine a small business’s credit history and overall creditworthiness. Frequently, alternative lenders end up charging borrowers more than traditional banks or credit unions. These are all elements to consider when looking to obtain an unsecured business loan from any type of financial institution, including the Small Business Administration’s (SBA) small business loans. 

How Blake Mortgage Can Help  

Hopefully, through this overview on unsecured business loans, you have been able to see some of the benefits this type of loan can provide to you and your small business operation. If you’re looking to start the process of obtaining an unsecured business loan, then Blake Mortgage is here to help. 

The dedicated team at Blake Mortgage works diligently to connect you with a wide variety of financial institutions that are willing to lend money to small business owners seeking loans. Whether you’re worried about qualifying for a loan or simply getting the best rate, we can help. 

Are you ready to discover how Blake Mortgage can help you obtain a business loan today? If so, give us a call or make an appointment to learn more.