Are you thinking about investing into your local real estate market? A bridge loan can turn your real estate vision into reality. Here’s how to leverage bridge loans for local lending purposes.
What is a Bridge Loan?
A bridge loan differs from a traditional loan due to its easier-to-qualify terms. Although these loans may come with higher interest rates than a traditional loan, they offer the convenience of getting hard cash faster while also waiving many of a traditional loan’s requirements. A bridge loan is the right choice for you if you are looking for faster cash receival, if you have a troubled credit history, or if you need a loan on a property that is in poor condition. It is common for investors to use bridge loans for their fix and flip properties.
You can expect a more rapid approval when purchasing a property with a bridge loan. The lender is directly servicing you, so there are less obstacles in your path to obtaining your property. A bridge loan also gives you the chance to build a relationship with your lender, making it easier to get loans in the future.
How to Use Bridge Loans for Local Lending
A lack of inventory is a real concern during a hot real-estate market, leading many investors to turn to construction properties. You can leverage a bridge loan to invest into real estate construction by working with a private lender who is willing to make your vision come true. A construction loan is a short-term loan that gives you the ability to build the property you want at an interest rate determined by your private lender. When there is low inventory on the market, leverage construction loans to build new investment properties.
Fix & Flips
One of the most common uses for a bridge loan is to invest into a fix and flip property. Traditional lenders are not as willing to lend to investors with damaged or distressed properties. Since fix and flips require adding value to the property, the amount of cash available to you through a bridge loan is based on the after-repair value (ARV) of the property you want to flip. Leverage bridge loans for local lending by investing into fix and flip properties.
Whether you are looking for a long-term rental or a short-term rental property, a bridge loan can help leverage you in the market with its ability to get cash in your hands fast. Residential investors prefer bridge loans for rental properties for their lack of limitations on borrowing. These loans have a much higher cap regarding the number of assets or dollar amount a local lender can lend to an investor. Many investors leverage bridge loans for short-term vacation rentals. These rentals are time sensitive, so receiving fast-cash is an advantage in this particular market.
Is investing into a multi-family property more your style? A bridge loan can leverage your position in this market. A multi-family property is considered to be any type of rental property with two or more units. Using a bridge loan can leverage you by offering more capital to invest into multi-family properties so you do not have to unload other investments. You are able to pay back bridge loans faster than a traditional loan with zero fees or penalties. Make your dream investment become a reality by leveraging bridge loans for local lending.
RCN Capital offers short-term and long-term financing options for real estate investors. Whether you are looking to fix & flip properties or hold properties for rental income, RCN has flexible options that are suited to your needs. Connect with us today to discuss your next real estate investment.