Hard Money Bridge Loans
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If you’re looking for hard money bridge loans, you really need to learn about the industry to find out if this is the right loan product for you. If it is, we may be able to help you find a lender who is willing to do hard money bridge loans, but because there is usually some legwork involved in matching the right lender to the right borrower, it’s best to start with some preliminary knowledge.
What is hard money?
First, it’s important to understand what hard money is. Hard money is simply money loaned with only a piece of real estate as collateral. There is no credit check involved.
Often, hard money loans are made by a private party investors to a borrower when the borrower is not able to secure financing through normal channels like banks or savings and loans. This is not always due to poor credit, as might be suspected. In a tight lending environment where traditional lenders simply don’t want to take risks with business or real estate investors who don’t have a deep or long credit history, a hard money lender can come in and make it happen for a price. The price is always considerably steeper than that of traditional loans, and that’s simply because there is much greater risk involved for the lender. If you want a hard money loan for short term financing, be prepared to pay extra for the privilege.
What is a bridge loan?
Perhaps it’s obvious, but, let’s also clear up what a bridge loan is. As the name implies, a bridge loan is a loan that bridges the gap between the financial need and the availability of traditional financing. Joe Businessman landed his largest order ever for widgets and doesn’t have the money in his business line of credit to buy the raw materials to deliver. After exhausting his options his bank, perhaps because the banker just isn’t familiar with Joe’s industry, Joe takes his contract for the order to someone who makes hard money bridge loans, with his office building as collateral. The investor takes a calculated risk and lends Joe a hard money bridge loan so he can fulfill the order and grow his business.
Where to get hard money bridge loans?
Hard money bridge loans can be difficult to find because the investors who make them are very independent and often specialized. If an investor is not thoroughly familiar with the real estate market where the property is that will be used as collateral, he or she will probably not put their hard earned capital at risk there. So the challenge for someone who needs hard money loans is to find an investor who either lives in his market or has prior real estate experience in his market.