Rental properties can be a valuable investment, but many are quickly stumped by the prospect of financing. If you’re thinking about purchasing a rental property but aren’t sure where to get the money for it, you’re in luck—you may be able to secure funding using other property as collateral.

Square One: Funding

Purchasing an investment property is exciting; there’s so much to dig into, and it’s easy to get overwhelmed with all the opportunities just waiting to be seized. As the saying goes, however, you’ve got to learn to walk before you can run. In the case of buying a rental property, this means putting the details on the back burner for a while and focusing on funding it first.

Generally speaking, when prospective buyers don’t have the money to purchase a property outright, they turn to a financial institution for a loan. Since a lender can’t assume that a given borrower can be trusted to abide by the terms of the loan agreement, certain conditions need to be met for the loan to be offered.

Many lenders rely heavily on credit scores to determine applicants’ fitness as borrowers. This makes getting funding significantly more challenging for those with low credit scores or insufficient credit activity. For these kinds of borrowers, hard loan companies like Equity Wave Lending offer specialized business purpose loans that use collateralized properties instead of credit scores to secure the agreement.

What Is Property Collateralization and What Can Be Used as Collateral?

As its name suggests, property collateralization is a process in which a borrower puts down the value of a currently owned property as collateral for the loan. Commonly used types of property include the following:

  • Real estate (e.g., houses, land, business offices)
  • Vehicles (e.g., cars, boats, motorcycles)
  • Investment accounts
  • Savings and certificates
  • Future income (stated income loans)


Real estate assets are either owner-occupied or non-owner occupied. If more than half of the property is used as the owner’s personal residence or place of business, it is considered owner-occupied. If a collateral property is non-owner occupied, approval is based solely on the value of that property. If it’s owner-occupied, the lender also takes other relevant assets and business revenue into account.

By placing a property on the line, the borrower shows she is confident enough in her ability to repay the loan to risk that collateral property. It also protects the lender from total loss; if the loan terms are not met, the lender may take ownership of the property.

Applying for a Collateral Loan with Bad Credit? Get Fast Approval with Equity Wave

While some lenders require a multi-day, multi-step approval process, Equity Wave Lending makes loan approval easy. Because our private money loans aren’t held up by credit checks, we can quickly get you approved. Our stated income investment property loans can go from application to cash-in-hand in as few as 7-15 days!

Contact us online or call (888) 399-8881 to learn more.