Term Loans for Real Estate Investors: A Long-Term Strategy for Building Wealth

When it comes to building wealth through real estate, having access to the right type of financing can make or break a deal. While hard money and DSCR loans are popular for specific strategies, term loans offer stability, predictability, and long-term growth potential—especially for investors focused on income-generating properties.

What Are Term Loans?

A term loan is a type of financing where a borrower receives a lump sum and repays it over a fixed term—usually 5 to 30 years. For real estate investors, term loans are ideal for buy-and-hold rental properties, offering stability, predictability, and long-term growth potential. These loans often come with fixed interest rates, making it easier to manage monthly cash flow and plan for the future.

Why Real Estate Investors Use Term Loans

Term loans are particularly useful when:

• Acquiring turnkey or stabilized rental properties

• Refinancing out of a short-term loan (e.g. bridge or hard money)

• Scaling a long-term rental portfolio

• Leveraging equity from existing assets

  
  

Whether you’re a new investor or an experienced landlord, a term loan can help you maximize returns while minimizing financial volatility.

Key Benefits of Term Loans for Real Estate Investors

✅ Fixed Interest Rates

Lock in a predictable monthly payment that protects against rising rates and simplifies budgeting.

✅ Long Repayment Terms

With amortization periods of up to 30 years, term loans keep payments low and cash flow high.

✅ Portfolio Scalability

Term loans can be used repeatedly as you acquire more assets, making them ideal for long-term portfolio growth.

✅ Low Cost of Capital

Compared to short-term financing, term loans generally offer lower interest rates, helping you preserve profit margins.

✅ Refinance & Cash-Out Options

You can refinance an existing property to reduce your rate or cash out equity to reinvest in your next deal.

Ideal Properties for Term Loans

Not every investment qualifies for a term loan. Lenders typically favor:

• Stabilized rental properties (1–4 units or multifamily)

• Properties with a steady rental history

• Borrowers with good credit and provable income

• Turnkey or recently rehabbed assets

  
  

How Term Loans Compare to Other Loan Types

Loan Type	Best Use	Term Length	Rate Type	Based On
Term Loan	Long-term rentals, refinancing	5–30 years	Fixed or ARM	Borrower + Property
Bridge Loan	Flips, fast closings, rehabs	6–24 months	Interest-only	Asset-based
DSCR Loan	Rentals qualified by cash flow	5–30 years	Fixed or ARM	Property income only
Hard Money	Quick flips, distressed properties	6–12 months	Interest-only	Collateral

Example Scenario

Investor Goal: Buy a turnkey duplex for $400,000 that generates $3,200/month in rent.

With a term loan:

• 30-year fixed loan at 7.5%

• Monthly P&I payment = ~$2,800

• Positive monthly cash flow = ~$400

• Long-term wealth via appreciation and equity buildup

  
  

By locking in financing now, the investor gains predictable income, low financing costs, and a clear path to portfolio growth.

Frequently Asked Questions

🏡 Can I use a term loan for a rental property?

Yes. Term loans are commonly used by real estate investors for buy-and-hold rental properties.

💳 What credit score is required?

Most lenders prefer a minimum score of 660, but some offer options down to 620 or lower with compensating factors.

🧾 Do I need to show income?

Yes. Term loans typically require proof of income, such as W-2s, tax returns, or rental property income. DSCR loans may be a better fit if you can’t verify income traditionally.

🔁 Can I refinance into a term loan after a flip?

Absolutely. Many investors refinance short-term loans into term loans to secure long-term financing and cash out profits.

📈 Ready to Build Long-Term Wealth with a Term Loan?

At Pure Business Capital, we help real estate investors secure term loans tailored for rental property success. Whether you're buying your first rental or refinancing a portfolio, our team is here to help you grow smarter and faster.

👉 Apply now. Predictable payments. Lasting returns. Real estate done right.