Asset Based Lending for Real Estate Investors

Real estate investors find asset based lending attractive because loans are based on the property or project, rather than the personal credit history or cash position of the borrower. Instead, lenders look at the numbers: What’s the exit strategy and anticipated return for the investor? What’s the as-is value of the property? And what is the after repair value of the property as a fix and flip? They look for safety in the numbers of the deal rather than debt-to-income ratios and credit scores of the borrower.

These loans work great for real estate investors since many are self employed, some have existing mortgages that exclude them from traditional bank financing; and for those new to investing – it offers funding options that a traditional lender might not. So unlike the homeowner who has to prove income, existing debts and a whole lot more, an investor looking for asset based funding needs to document the viability of his or her property and it’s intended use and anticipated outcome.