A bridge loan is a type of short-term loan that may be used in real estate transactions when the buyer lacks the funds to finance the purchase of the new property without the prior sale of the first property.
The maximum amount you can borrow with a bridge loan is usually 80% of the combined value of your current home and the home you want to buy, though each lender may have a different standard. For example, if your current home is worth $250,000 and the home you want to buy is worth $330,000, your maximum bridge loan amount would be calculated this way: ($250,000 + $330,000) x .80 = $464,000.
A bridge loan in real estate can be used to buy another home before you sell your current one. A bridge loan essentially helps fund your new home purchase. For example, you might use it to cover closing costs for a new mortgage.
You can also use a bridge loan to present an offer without a financing contingency when you make an offer to purchase a home. A financing contingency is a contract clause that allows a buyer to get back money put down without penalty in the case the buyer cannot secure financing. Sellers tend to prefer offers with fewer contingencies, but it’s important to have protections in place in case you can’t secure funding.
A bridge loan can also help you get a leg up over other buyers in a hot housing market. For example, if a seller is interested in a quick sale (and many are), the seller may be more willing to make a good deal for a buyer who has the money to close quickly.
Fix-and-flip loans are short-term loans used by real estate investors to purchase and improve a property to then sell for a profit. These improvements range from minor renovations to a complete reconstruction of an existing home. Fix-and-flip loans are used exclusively for residential real estate investments, so renovating a school, for instance, would not qualify for this type of funding.
In a fix-and-flip project, the property is often purchased at auction, through a foreclosure or a bank short sale. A buyer may later try to sell the property “as-is” or may choose to add value by improving on the property before selling it. This is where fix-and-flip loans come in. When a buyer decides to upgrade and resell the property for profit, fix-and-flip loans are typically used to cover the upfront costs of renovating the property.
Whether you’re a real estate investor building a property portfolio for income or a landlord retrofitting an industrial property, we are prepared to meet your capital needs. National Property Investing is committed to working with you to customize a buy and hold hard money loan on your terms.
Our full and partial amortization buy and hold loan programs are ways for our borrowers to extend the life of their loan while reducing the principal amount. Rather than simply paying the interest each month, a portion of your payments will be used to pay down the amount initially borrowed.
The ‘buy and hold’ strategy involves picking up an undervalued or foreclosed property with the intent of selling it once the value has appreciated. In the meantime, it may make sense to renovate the property and open it to renters. Because you need cash to purchase foreclosures, buy and hold hard money loans are a great way to secure the financing you need.
Our buy and hold loans on residential real estate have been a great source of success for many of National property Investing's top clients. With traditional lenders limited to lending on owner-occupied or primary residences, National property Investing works with the top private money lenders in the market on non-owner-occupied residential properties. We lend to real estate professionals interested in buying and holding properties for long-term cash flow. If you’re buying distressed properties and fixing them up, we can design our loans to maximize your options. We see the value in the ‘buy and hold’ strategy and will design the loan that fits your needs. And with no limits on the number of properties, you can leverage one property or your entire portfolio.
It's possible to refinance an investment property similar to how you do it with a primary residence. When you refinance, you may be able to secure a lower interest rate or change the terms of your loan. You can also take money out of your accumulated equity using a cash-out refinance or home equity loan.
That’s giving real estate investors a new opportunity to “cash out” the equity on their rental properties to accomplish a number of goals:
Call to speak to us about your plans with refinancing your investments properties.
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