The process of lending money is quite hectic for people, and they do not follow this particular path often. There are various reasons not to go for loans, and one of those is the lack of flexibility and colossal approval criteria.
On the other hand, the investors are more fond of taking loans. This distinction can be seen due to various reasons or perspectives or even the choices of loans. We all know that investors are quite fascinating, and they do not fear taking risks.
If you think about real estate persons, they are already in an exciting industry, trying to build their wealth more quickly than others. In contrast, ordinary people do not rely on any significant investments, and thus they do not go for lending money.
It’s the real estate investors who actually feel the need for quick loans, and thus traditional loans are not for them. Instead, asset-based bridge loans can be on the list for them.
What Is A Bridge Loan?
Bridge loans basically create the bridge between the gap between short-term cash requirements and long-term loans.
This type of loan is used to manage the permanent financing or payment of existing obligations. These short-term loans can be used for up to 12 months on average.
For instance, you are willing to buy a new apartment immediately, and your old apartment will take time to sell. Your plan was to manage the selling money of the old apartment and use it to buy the new one.
In such situations, if your plan does not work, asset-based bridge loans are appropriate for you. That is why investors, most of the time, use this kind of loan.
Why Should You Consider Bridge Loans?
There are several benefits available for an investor to consider as their prime lending option.
- Bridge loans are quick to deal with and can help you to buy a property as quickly as you want. Let’s say you are pre-approved for a mortgage, and you also have found a perfect property to buy. If you do not have cash in your hands, you can go for Bridge loans.
- If you are willing to relocate to a new place and want to enjoy staying or using it for the real estate business, you will be able to do that with flexible bridge loans. When you are not sure about the date of the old property selling process, you can easily go for bridge loans.
Bridge Loans To Look Out For In Austin
After we have understood the concept of bridge loans, we can now look at some efficient bridge loans available in Austin, Texas.
1. Housemax Funding
Most real estate investors want to build a strong lending portfolio. Building a solid portfolio as a real estate agent will not be relatively easy for you if you do not consider bridge loans. Here Housemax Funding can come in to secure you a fast rent loan.
2. Capstone Capital Partners
Capstone Capital Partners is a hard money loan lender that can provide you the bridge loans for the period of 6 months and 18 months. We all know that the interest rate is pretty high for bridge loans compared to traditional loans, and here they range from 9.99% to 14%.
3. Alpha Funding
This lender has a variety of bridge loans to offer you. For instance, hard money bridge loans, equity bridge loans, non-recourse bridge loans, large bridging loans, et cetera. If you choose Alpha Funding, it might give you the best competitive rate in Austin, as they claim.
4. Stallion Funding
Stallion Funding can offer you creative financing options, including asset-based bridge loans. They say they have fewer limits and more significant opportunities. Ranging from single family to multi-million dollar commercial development, they have to offer bridge loans for all.
5. Patterson Investments
This Austin-based lender is specialized in bridge loans, hard money loans, and fix and flips. They also have a distinctive range, including a single family, Church, Warehouse, Medical et cetera.
Pros And Cons Of Bridge Loans
Whether you need quick cash in your fix and flip property or to smoothen up your interiors to get it ready for sale, there are a number of factors to consider before deciding whether or not bridge loans are right for you.
- Flexible Repayment Options: private money lenders are aware of the fact that fixing and flip investment takes time and might even take longer than previously planned. In a situation when the thing is not working as planned, payment can be deferred and made into an interest payment-only arrangement till the house is sold off.
- Quick Access To Funds: Private money is secured and funded by the property’s value. Hence, they do not take any credit rating into consideration. As a result, bridge loans are approved in a much shorter time frame than traditional loans.
- No Need For An Income Statement: Bridge loans from private lenders are exempted from tax regulation. Hence, they do not need a credit score to apply for the loan.
- High-Interest Rates: The bridge loan typically comes with a higher interest rate and within a small period of time. While you have to only pay interest till the house is sold off, the interest alone stands up to 15% or more.
- Increased Risk and Debt: The rate of interest is quite high. If that is not enough, often the loan is split between two to three properties. That means the individual might have to pay for multiple loan installments simultaneously.
If you want to be successful in the real estate market, you will need to focus on the particular processes of lending money. Bridge loans can really mitigate your problem of buying and selling properties.
Now it’s the time for you to analyze the local market and understand the best option of bridge loans available for you.
That’s for this article. If you want to know more about bridge loan and how you can use them in your business, reach out to us. We will be happy to help you out.