Bridge loans are a temporary loan, often used by the investor to purchase, build, or fix-and-flip a home or commercial property. These loans can give small businesses short-term capital to work during the time it takes to renovate a property, find tenants or establish a business, or sell the renovated property. Hard money bridge loans are able to sidestep the restrictions that conventional lenders are bound to, making it much easier for investors to secure funds, and the quick approval process is vital to keep up with the fast pace of the market.
Fix and Flip
Fix and flip investors rehab a single-family home to resell at a greater appraisal value. The key to a successful fix-and-flip project with hard money is to keep renovation costs down, get the maximum increase in property value, and hang onto the property for the shortest possible length of time.
Cash Out Refinance
A Cash Out Refinance loan allows an investor to refinance their existing mortgage loan for an increased amount, and obtain the difference between the original mortgage and the cash out loan in cash. The Cash Out Refinance loan can be beneficial for property owners that need to pay for improvements, or for rehab work on distressed property. The freed-up cash can also be used to cover equipment or capital expenses for your business.
Buy and Hold
Buy and Hold options can help borrowers extend their loan and reduce the principal amount. Instead of paying interest every month, you can direct a percentage of the payments to pay down the initial loan amount. Hard money loans are generally short-term, but sometimes an investor building a property portfolio or a landlord doing major renovations on an industrial property may need a longer-term loan. This option can also be helpful for a developer looking to extend a bridge loan.
Distressed Properties can be an excellent investment opportunity for investors looking to renovate and resell. Banks and lenders that have repossessed a property need to unload it expediently. Distressed property loans are offered through a variety of programs that allow clients to leverage their capital and their current real estate holdings.
Ground Up Construction
Ground up construction is a more complex process than a residential rehab or fix-and-flip, so it’s a project more suited to a very experienced builder or borrower. If you’re applying for a ground up construction loan, be sure to have thorough documentation of your budget plan, and your general contractor’s qualifications. You’ll need to be prepared to go over the architect’s, engineer’s, and contractor’s contracts, as well all building permits and authorizations for the property. Hard money for ground up construction can help commence the building process and facilitate progress.