If you are a real estate investor, you know the importance of having working capital. Without it, you cannot acquire properties or see success in your investment strategies. While numerous property funding options are available, bad credit can greatly limit your choices.
While most traditional lenders look for a credit score of at least 650 in most cases, there are options for those with poor credit. Do not let bad credit prevent you from reaching your commercial real estate investment goals. Help is available!
A hard money bridge loan is ideal for real estate investors with less-than-perfect credit. Loans like can even help you improve your credit.
What Is a Hard Money Bridge Loan?
This type of short-term financing option provides a temporary source of capital until an investor can acquire a more traditional loan. This type of loan is also referred to as a gap loan.
Real estate professionals use bridge loans in the following ways.
- Starting a business
- Buying out a partner
- Rehabbing and renovating properties
- Purchasing commercial properties for investment purposes
Conventional lenders are bound by a strict set of rules. If you don’t meet their requirements, they will not consider you for a commercial property loan. You need a private money lender, that is not bound by the same harsh restrictions and can offer bridge loans.
How Can You Qualify for This Financing?
This type of financing is based on your assets, not your credit score. If your FICO score has been holding you back, it need not any longer.
A hard money lender puts their full focus on the loan-to-value (LTV) numbers. In some cases, these loans are capped at 65% of the LTV or less, and the rates are very fair. In some cases interest-only loans may be an option.
Most borrowers will be offered a 12-24 month hard money bridge loan. These loans are not offered as term loans.
Your previous bankruptcies, foreclosures, and even credit score will often be overlooked.
You want a hard money bridge lender, that focuses on customers as individuals. If there is enough equity in the property and you can repay the loan, you can get approved for a hard money bridge loan.
EXAMPLE LOAN SCENARIOS
Hard Money Bridge Loans Are Much Easier to Obtain
A hard money bridge loan is much easier to obtain, and the financial checks are less meticulous. By focusing more on the property’s value, you can get the funds you need, even if your financial record is less than stellar.
Bridge loans can also be approved in much less time. For traditional loans, you are looking at up to 90 days before approval. You want a hard money lending company, that can approve your financing in as few as two weeks.
Because there are no strenuous financial checks and a much faster turnaround time, hard money lenders take on more significant risks than conventional lenders. If you have bad credit, bridge lenders will want the loan repaid in a shorter time.
Does a Hard Money Bridge Loan Fix Poor Credit?
While the main focus of this type of loan is obtaining the short-term working capital banks are unwilling to give you, there is also an added plus many investors are unaware of when seeking a bridge loan.
Bridge loans do not have a credit score requirement. Private money loans can even improve your credit score.
If you are an investor with more than 50% equity in your investment property, you may obtain a hard money loan that allows you to take the cash out as needed to pay off your debts and clean up your credit. Once you raise your credit score over 650 and have gained sufficient equity, you are ready to seek loans from a traditional mortgage lender.
What Should You Know About Applying for a Hard Money Bridge Loan?
Due to regulations, this type of bridge loan (commercial hard money loan) is limited to investment properties only. It is quite commonly used for apartment complexes. If you want to invest in an owner-occupied property, this type of loan is not appropriate.
The regulations regarding hard money bridge loans vary by state. Some states have enacted non-judicial foreclosure laws, making private money lenders feel more comfortable relaxing the rules to help borrowers get approved. Loans with low FICO scores are not always eligible in rural areas of the country.
MORE EXAMPLE LOAN SCENARIOS
Bridge Loans for Investment Properties
When applying for traditional financing for an investment property, you will be required to show a history of tenant payments. With bridge loans, you can get approval promptly so you have time to stabilize the property and attract new tenants for a steady stream of income.
You won’t have to worry about providing tenant payment histories which can make it difficult to maintain stabilization. Instead, you want a lender that offers a quick close on the vacant property.
Work with a company that offers you flexible terms on various property types. This gives you time to make renovations and stabilize the property as quickly as possible.
Bridge loans are as good as cash. Best of all, you can leverage your entire commercial portfolio or a single building. You can get help for all your financial needs.
Get Started Today for Fast Approval on Your Hard Money Loan
If you are an investor or a future borrower, working capital is essential. Without it, you will struggle in your business.
You want a bridge loan lender familiar with the neighborhood that can help you bridge the gap until your credit score improves to the standards of traditional lenders.
Most property loans are offered on the equity of your real property. In most cases, you will find no limits on the bridge loans or properties lenders are willing to finance. You will even find same-day prequalification on loans in many cases.
Contact a hard money lending company right away to discover more information. They are here to help you get the financing you need for your real estate property endeavors. With a simple process, you can quickly obtain the capital you need.