How Brokers Are Using Bridge Loans to Stay Competitive

Bridge loans are a versatile financing tool that brokers and lending partners are utilizing to fund a wider variety of deals. These loan programs offer significant advantages over conventional mortgages including fast access to funding, asset-based approvals, and customizable terms. Brokers that offer these programs are able to close more loans, and that helps them stay highly competitive in today’s fast-moving real estate market. Are you interested in learning more about bridge loans and how they can help you grow your business? Continue reading for our quick guide.

Understanding the Unique Advantages of Bridge Loans

Unlike standard mortgages, bridge loans are short-term financing programs that range from 6-24 months in duration. They are asset-based, which means the loan is backed by owned property as collateral (typically the property being financed). This allows lenders to be more flexible when it comes to loan approval, customizing terms, and the types of projects that can be funded with these loans. They are often used to “bridge” gaps in an investor’s finances, like with buying a new property while still in the process of selling another. They are also an ideal solution for time-sensitive scenarios, since they can be approved much faster than conventional loans.

Real-World Ways Brokers Are Using Bridge Loans to Win More Business

Bridge loans allow brokers to fund more deals because they give your clients more ways to fund their investments. Savvy investors are already using bridge loans to enhance their property sourcing methods. Since they are able to close quickly, bridge loans help borrowers win more often in highly competitive markets and fund time-sensitive investments like home auctions. For investors looking to utilize a 1031 exchange, bridge loans allow you to acquire a new property while still holding on to an existing home. Bridge loans can even provide additional funding for value-add or renovation projects, on top of covering standard acquisition costs. Their shorter timeline is also much more suitable for these investments.

Positioning Bridge Loans as a Value-Add Strategy

Bridge loans open the door to financing short-term projects, and this gives your existing clients an opportunity to branch out into new investment strategies. While it’s your job to educate clients on the risks and benefits of using these types of loans, you can also position them as a way to diversify a portfolio through different asset classes. Bridge loans are a great solution to the unique problems investors sometimes face, with the ability to provide quick cash for acquisitions or completing renovation projects when funding runs out. They give borrowers the quick cash injection they need while also giving them time to secure more permanent funding.

Tips to Start Offering Bridge Loans Strategically

Want to start closing more bridge loans? It’s all about identifying the clients who would benefit the most from this type of financing. A bridge loan might not be ideal for every situation, but when an investor has a financing dilemma, it could be just what they need.

Working with lenders who understand the bridge lending process is also key; they’ll be able to help you provide better service to your clients, since they know how important speed and reliability is when it comes to real estate investments. Once you have a preferred lending partner, develop a system to streamline the application process, including a necessary document checklist and other items the borrower will need to take care of. This helps you build a reputation as a broker who prioritizes speedy financing, and it can help you attract future business from client referrals.

The Wholesale Lending Advantage: Speed, Service, and Support

We can’t stress enough how beneficial it is working with a qualified lending partner. As we mentioned, lenders with experience in the bridge loan space understand these investments, and help you provide superior service to your clients. Look for a wholesale partner who prioritizes their broker partners, and has a reputation for speed, transparency, and communication in their deals. Some lenders might offer tools or resources to help you close more loans, including rate sheets and white label marketing materials. As you begin to form a working relationship, you might even gain access to other benefits, like a streamlined application process or referrals to real estate pros you can connect your clients with.

RCN Capital

To help your clients maximize the returns on their next investment, partner with a lender that can provide you with the best leverages and rates. RCN Capital lends to real estate professionals, commercial contractors, developers & small business owners across the nation. We provide short-term fix & flip financing, long-term rental financing, and new construction financing for real estate investors and lending partners. If you are looking to offer bridge financing to your clients, RCN Capital has competitive loan options and an award-winning broker referral program available to partners.