If you’re planning to buy an investment property, one of the first decisions you’ll make is how to pay for it. There are three common options: cash, hard money, or a traditional loan. Each has its pros and cons depending on your strategy.
Cash
Cash is king. Paying in full gives you greater buying power and puts you at the top of the list in competitive markets. Sellers love cash offers because they close fast and reduce risk. The downside? Not everyone has that kind of liquidity. But if you do, it’s the simplest and strongest option.
Hard Money
Hard money loans are designed for short-term holds, like fix-and-flip projects. They come with high interest rates, so they’re not ideal if you plan to rent and hold long-term. If your strategy is flipping, hard money can be a quick way to fund your purchase — but it’s not for buy-and-hold investors.
Traditional Loan
Conventional financing works for long-term rentals, but it comes with requirements:
- At least 25% down
- Strong credit score
This option is great for investors who want to leverage their money and build a portfolio over time. Just be prepared for stricter underwriting and a longer closing process.