Bridge, Hard Money and Private Loans.
Bridge loans get their name from the idea that the short term, typically 12 month loan, will provide a finacial Bridge between one objective to another. Like financing the acquisting of an additional property before selling the existing. Or to renovate or lease up a property before selling or converting the loan to long term financing.
Hard Money Private Loans
The name Hard Money is often used synonymously with Bridge Loan. But Hard Money loans tent to prioritize the property's value over the borrower's creditworthiness.
Both Bridge and Hard Money Loans differ from Rehab loans as they don't typically consider the increase in value over the term of the loan in making their underwriting analysis.
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Long Term Rentals
Long Term Rentals or also know as DSCR (Debt Service Coverage Ratio) loans are specialized mortgage products tailored for income-generating properties. Key features include lenders assessing the property's cash flow, placing less reliance on the borrower's personal income and credit, longer loan terms (typically 10 to 30 years), variable interest rates based on property performance, and varying down payment requirements.
Long Term Rentals
These loans are versatile, applicable to both commercial and residential rental properties, making them valuable tools for real estate investors. Investors should prepare detailed property financials to demonstrate the property's ability to generate rental income that covers the loan's debt service, unlocking opportunities beyond traditional financing constraints.
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Rehab or Fix and Flip
This is short-term financing, typically 12 - 18 months, designed for real estate investors who want to renovate and then sell or keep their property as a long term rental.
One of the diffences between a Rehab loan and a Bridge loan is that the value after competion is considered in a Rehab loan. This is typically not factored in for a Bridge Loan.
Fix and Flip
Approval for these loans can occur swiftly, with terms and availability contingent on factors such as your credit scores, relevant project experience, and the down payment or equity you can offer in the property.
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Construction Ground Up
These loans are specifically intended for investors looking to build or renovate residential or commercial properties to generate rental income or sell them once construction or renovation is complete.Construction loans are typically short-term loans, often with terms ranging from six months to a few years.
Construction Ground Up
Funds are disbursed in installments or "draws" at various stages of the project's completion. Down payment can vary from 10% to 30% or more of the total project cost.
Experience commensurate to the proposed project is important. Creditworthiness and financial stability are also key considerations during the approval process.
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