What is an acquisition loan?
Who should get an acquisition loan?
Benefits of an acquisition loan?
Investors can only use a certain percentage of the loan to rehab each property. The amount is based on the property’s value and the maximum percentage allowed per property. Lenders do this to limit the risk of an investor deploying too much capital on one property.
An investor from South Africa has $250,000 in liquid assets ready to invest in real estate. The investor discovers four opportunities.
Property 1 = $180,000
Property 2 = $150,000
Property 3 = $160,000
Property 4 = $130,000
To acquire all four properties the investor would need $620,000. The investor alone can’t afford to purchase the four properties. However, acquisition loans allow the investor to purchase all four with the help of financing. An acquisition loan is an incredibly helpful tool for real estate investors as it helps them scale their business, wealth and income.