Real estate can be an incredibly lucrative investment. Purchasing property, however, can be expensive. Buying with cash will always get you the best deal, but you might not always have the money on hand. Or, you’re able to buy the property but don’t have the cash for renovations, improvements, or other needs. To buy what you need, a loan may be necessary. Here’s how you can use a business loan for a real estate investment.

Buy with Cash Then Get a Loan

One way to use a business loan for real estate investment is to first buy the property and then take out a loan within 6 months of the purchase. You may be able to get a Fannie Mae backed loan for 75% of the home’s value. The rates are typically better than a cash-out refinance and are only slightly higher than what you might pay if the property were your primary residence.

Finance Multiple Properties

Through Fannie Mae, you can finance up to 4 properties (which includes your primary residence). Duplex, triplex, and quadplex structures all count as single properties. Technically, you can finance up to 16 homes as if they were only 4 properties. You can finance more units with more favorable terms.

To qualify, you do need to provide at least 25% down. You should also know that future rental income may not count toward qualifying for the loan unless you have at least 2 years of investing under your belt.

SBA Loans for Investment

It is possible to get an SBA loan (with only 10% down) for real estate but doing so is a bit trickier. You cannot use the loan on a property where the primary source of income is real estate investment. The property has to be mainly used for the business taking out the loan. In most cases, the business only needs to occupy 51% of the property. This means that you can rent out the rest of the space (such as upstairs apartments) to supplement the income of the business.

If you are getting financed for a new construction, the regulations are different. The business has to occupy at least 60% of the building being constructed. This means that you can only rent out up to 40% of the property to others.

Investing in real estate can be quite profitable. Business loans can help you to achieve your goals and get the most out of your investments.