For commercial real estate investors, finding an effective financing option to keep the business running is paramount. An investor needs a steady income and cash flow for the venture to bear positive fruits. This is why considering loans to finance the business becomes beneficial. When looking for loan options, you should consider stated income loans and meet your investment goals.
What Is a Stated Income Loan?
Most lenders seek to understand the financial status of the borrowers before approving their loan applications. Some lenders use formal employment as a criterion for approving commercial real estate loans. This is, however, different with stated income loans as they are available for CRE investors or borrowers with no stated income or employment.
How Stated Income Loans Work
Most real estate investors depend on self-employment to take care of their financial needs. They usually don’t have weekly or monthly income but depend on buying and selling property and units. With this understanding, lenders who provide stated income loans rely on assets that these investors have rather than their income to approve and fund their projects. The lender will consider the borrower’s bank statement, and tax returns to determine their eligibility for the loan.
A stated income loan works best for a newbie in the commercial real estate investment. With the fluctuations in the economy, a CRE investor can find it hard to sustain the project’s needs bearing in mind the state of unemployment. A stated income loan comes in handy in such a case until when the market and economy make it easier for the investor to thrive.
Benefits of Stated Income Loans
This type of CRE financing option suits people who depend on self-employment to meet their daily needs. It saves them time and resources, especially if they cannot file or document their regular income. With stated income loans, self-employed persons can own houses without getting regular jobs.
Quick Application Process
The application process is also quicker as the lender only looks at the property’s value to determine the borrower’s eligibility.
When you secure a stated income loan, the lender won’t make the decisions for you, as is the case with banks and other financial institutions. There are also no complicated application formulas with these types of loans.
For professional guidance on stated income loans, get in touch with our team today.