Investment loans for Real Estate – All you need to know

Mar 6th, 2023

Last updated on March 13th, 2023 at 03:01 pm

For years and years to come, real estate business will continue to thrive in Nigeria. This is because the population of citizens spurn daily. Regarding this, there is an increase in the demand for affordable houses.

Therefore, it is one of the best investment plans you can opt for. However, considering the downtrodden economic condition and the need to maintain a moral standard of living, funding might be difficult. 

Alas, you can still achieve your dreams with adequate funds simply by going for an investment loan.

What is an investment loan for Real Estate?

Investment loans for Real Estate are the types of loan you take when looking to secure another home apart from your primary home for investment purposes.

The primary purpose of taking this loan is to purchase a real estate property with the expectation of earning a return on investment(ROI) over time. In other words, this means you purchase a real estate property, renovate the property, and either resell or rent it out.

What are the types of investment loans for Real Estate? 

The types of investment loans for real estate include:

1. Commercial loans:

A commercial loan is a debt-based cash agreement between an individual and a commercial bank. These are loans available to lenders for purchase, refinance and cash-out reasons. Investors use this loan to purchase different types of real estate properties worth millions of Naira.

2. Fix and Flip Loans:

We categorise a fix-and-flip loan as a hard money loan. This means that the real estate property is used as security for acquiring the loan.

This loan type is a short-term loan which allows lenders to borrow to complete the renovation of their property so that it can be put back on the market for rent.

3. Home Equity Loans:

A home equity loan is a consumer loan type, which allows a real estate property owner to borrow against the equity of their home. This type of loan financing is an excellent way for real estate owners to purchase another property. This loan type is very advantageous because it allows you to borrow up to 80% of the equity value of your home.

4. Private Money Loans

Also known as owner financing. This loan type is neither from financial institutions nor from your home equity. Instead, they are given out by people in society who are well-to-do and have extra cash. They aim to have a good return on investment in the loan.

What are the minimum requirements for investment real estate loans? 

Although the requirements for granting an investment real estate loan vary from lender to lender. Here are some basic lending requirements: 

  1. Your Credit score must be above average 
  2. You must have an excellent credit history 
  3. A stable source of income 
  4. You must have 5%-10%  in savings 
  5. Employment History

What are the benefits of investing in real estate?

Some of the benefits of investing in real estate include:

1. Competitive Returns:

 The real estate business offers mouth-watering returns to other forms of investments such as bonds and stocks

2. Portfolio diversification:

The diversification potential of real estate is one major reason you should choose to invest in real estate. The addition of your real estate to various portfolios helps reduce higher return per unit risk.

3. Inflation Hedge:

Investing in real estate gives you a hedge against inflation. This is because as the inflation figures surge high, so also will the rental of real estate property. 

4. Tax benefits:

One pro of investing in real estate is the exemption you receive as an investor from paying taxes. This is because the major source of income is through which is not liable to self-employment tax.


Investment loans are the best way to eradicate the limitation of insufficient funds. It is a solid bedrock upon which you can lay your foundation for the unlimited flow of income through real estate investment. Get this instrument and you will thank yourself in the future. You can read about rent-to-own real estate scheme.

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