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How Bridge Financing Helps Small Businesses in West Florida

What is the best type of financing for your business? Many small business owners would be tempted to respond, “The one that has the lowest interest rates,” but that’s not always the right answer. In reality, the best financing is the one that meets your company’s needs at the time. In many common situations that small businesses face, the solution is bridge financing.

What are bridge loans? They’re a type of short-term financing based on business assets. You receive funding based on the value of collateral such as inventory, equipment or real estate.

Traditional Funding Can Take a Lot of Time

One of the problems with conventional business loans is that the approval process can take significant time. We’re not talking about a few days or a week: Traditional loans can require several months before your company finally gets the green light.

Why is the approval process with economic development loans so excruciatingly slow? There are several steps that lenders need to follow. In the case of loans backed by the Small Business Administration, for example, it’s necessary for banks to check the applicant’s qualifications against SBA requirements.

During the application process, lenders have to check the application, look at your financial records, perform a credit check and meet to discuss underwriting questions. It also takes time to perform legal steps needed for the loan agreement, closing and other needs.

The Purpose of Bridge Financing

Fortunately, small business owners have several funding options available to help out in the meantime. That’s what bridge funding is all about. The purpose of a bridge loan (also called gap lending) is to “bridge the gap” with capital while you’re waiting for other sources of revenue or financing.

Ways Bridge Financing Helps Small Business Owners

Bridge loans may not have the same interest rates as long-term loans, but when it comes to flexible, short-term funding, nothing is better. There are many ways you can use this type of loan for your business:

  • Real estate projects: A common way to use a bridge loan is to close on a residential or commercial property while waiting for long-term, low-interest financing to get approved. That way, you don’t miss out on the property of your dreams.
  • Cash flow problems: Sometimes, businesses run into problems paying bills because clients haven’t paid their invoices yet. You can avoid credit problems by taking out a bridge loan in the meantime, then paying it off as soon as your customers pay you.
  • Business opportunities: Use bridge loans to take advantage of volume-based inventory purchases, special discounts on equipment or other opportunities.

The Advantages of Bridge Financing in West Florida

Bridge loans offer incredible flexibility. You can get approved and receive funds in about a week. This type of financing can cover 100% of the cost of equipment, inventory purchases, real estate, emergency needs and other business essentials. At HML Solutions, we’ve been providing this funding option for West Florida businesses for a long time. Contact us to see the benefits for yourself.

Using Hard Money Loans for Residential Property Investments in West Palm Beach, FL

The real estate market in Florida is booming and nowhere more so than in the West Palm Beach area. Those looking to become involved in residential property investment in this fast-growing area need a form of financing that can move at the same whirlwind pace as the market itself. At HMLS we offer hard money loans for residential properties that may be the solution you are looking for.

How Do Hard Money Loans Work?

Unlike traditional loans, a hard money loan is approved based on the value of the property you intend to purchase rather than on your own credit history. This can be essential for property investors and flippers who typically need to carry a debt to income ratio that can be concerning to traditional lenders who do not have a detailed understanding of the real estate industry. At HMLS we have extensive experience in real estate lending and a deep understanding of how your industry works. 

Since the property itself is so important in this kind of loan, you will need to provide multiple forms of assessments in order to determine the correct value of the property. You should look into market assessments for the West Palm Beach area, obtain a professional property assessment from at least one reputable source and consider getting a broker’s assessment as well. The quicker we are able to determine your property’s value, the quicker we can move you through the application and approval process.

Who Can Benefit From a Hard Money Loan?

The lengthy process of applying for a traditional mortgage and the ability to fulfill the requirements to be approved can be an obstacle for some investors. A hard money loan can be a convenient solution for reasons such as these:

  • You need to secure financing quickly to compete with other investors.
  • Your debt to income ratio doesn’t qualify you for a traditional loan.
  • You want to secure a loan with the value of the property rather than your own credit score
  • You only need a short-term loan until you are able to flip the property in question.

What Are the Terms of Typical Hard Money Loan?

Through our hard money loan program, you will benefit from terms such as these:

  • Loan amounts as high as  70% of your loan to value ratio
  • Repayment terms that range from 6 to 24 months
  • Industry competitive interest rates
  • Loans close in a matter of days

Reach Out To Us Today

At HML Solutions we specialize in hard money financing for both commercial and residential real estate professionals. Our extensive experience gives us a unique understanding of the real estate investment industry and your unique financial needs. Contact one of our highly trained agents today to schedule a consultation. We can help you determine if a hard money loan is right for you and get you started on our fast and efficient application process. Once approved, you could have the essential financing you need in a matter of days, allowing you to move forward on your next project. Contact HML Solutions today to get started.

A Deep Dive Into Hard Money Loan Solutions for Property Investors in West Palm Beach, FL

West Palm Beach is one of the hottest markets in the United States for property investors. That’s a good thing, because it means you can generate significant profits for your investment. However, it also means that you need a source of capital that you can count on. Why are hard money loan solutions a good choice for real estate businesses, fix-and-flip pros, and property investors in West Palm Beach, FL?

How Does a Hard Money Loan Work?

The point of a hard money loan is to help you get financing right away instead of waiting months for a traditional loan to get approved. This type of financing has easier qualifications and faster processing than conventional real estate loans. This can happen because the property you’re buying acts as collateral for the loan.

What Situations Require Hard Money Loan Solutions?

There are several situations when property investors often turn to hard money loans. You can customize the terms to benefit your specific goals:

  • Multiple projects going on at same time: Larger real estate investors often have several deals happening simultaneously. Even though they generate significant profits, these investors may not have much working capital available to cover the next project. In this case, turning to hard money loan solutions is a smart idea, covering the missing amount for closing costs until another property sells.
  • Great opportunity appears: Calling West Palm Beach a market with high demand is an understatement. As soon as you find out about an attractive property for sale, you have to act quickly if you want to swoop it up before another investor does. Having the ability to close ASAP can even allow you to persuade homeowners to sell to you directly before putting the home on the market.
  • Loan taking too long to clear: Traditional loans usually take at least 3 months to clear in Florida. That’s a long time for a property investor to sit around waiting. With hard money loans, you can get the real estate right away, get started on any work needed and sell it as soon as possible. For long-term property investments, you can transfer the higher-interest balance to a low-interest loan when it gets approved.
  • Credit score isn’t great: If your credit rating isn’t exactly star quality, it can be difficult to qualify for a conventional real estate loan. Fortunately, asset-based loans don’t focus much on your credit score. What primarily matters are the value and condition of the property you want to buy. Even the application process deals mainly with real estate documents, not business records.
  • Funds wanted for remodeling: One of the most common issues real estate investors run into in West Palm Beach is getting turned down for remodeling loans. Many traditional lenders don’t want to touch remodeling projects with a ten-foot pole. That’s sad because some smart improvements can massively increase your asking price for a property. Hard money loan solutions easily finance renovations such as bathroom additions, outdoor kitchens, lanais, open-concept dining rooms and countless other projects.
  • Property needs significant work: Similar to the situation with remodeling, trying to get a conventional loan for damaged properties is a real challenge in West Palm Beach. You notice a diamond in the rough that you can sell for way more than its purchase value. Lenders only see a massive risk. Hard money loans can help you achieve your vision for this type of investment.

Learn More about Hard Money Loan Solutions

To learn more about bridge and hard money loans in West Palm Beach, contact the experts at HML Solutions today.

Why Homeowners Use Bridge Loans for Residential Properties in West Palm Beach

If you’re looking for a way to fund a residential property need, HML Solutions can assist. We offer loans for residential properties so you can can have peace of mind knowing you won’t run into delays due to lack of working capital or other financing holdups. With a residential bridge loan, you’ll have the necessary financing to borrow against the equity or your existing property, so you can purchase a new property. 

About our Residential Bridge Loans

If you’ve never made a residential real estate purchase while owning existing property, you have  never heard of a residential bridge loan before. Residential bridge loans are a specific loan product that offers short-term financing that usess a borrower’s existing real estate as collateral. When you secure a real estate bridge loan, you are doing so with the intention of purchasing a new residential property. This can help make the purchase easier, and once you’ve secured your new property, your existing property is then sold to pay off your short-term residential bridge loan.

Bridge loans are a great option if you’re a homeowner who is considering purchasing a new home due to an expanding family or changing lifestyle but you don’t have enough cash available to purchase a new home, you may be able to leverage the equity in your existing home to help fund your purchase. Bridge loans are also a viable option if you’re a homeowner who’s interested in changing residences but you don’t have the income to qualify for most conventional home loans. If, for example, you’re retired and don’t have a large enough income but you own property with a lot of equity, a bridge loan may be the perfect solution for your purchase needs. 

How Bridge Loans Work

Here’s an example of how a bridge loan works. Let’s say you own your home but you’ve outgrown it and want to upgrade your lifestyle to move into a new home with more space. However, you may not have enough extra cash available on hand to cover a down payment or all-cash offer, but you have a significant amount of equity in your existing home. As a homeowner, you could sell your existing home, find and move into temporary housing, and use the money you make from selling your home to purchase your new home.

Once your loan is closed, you can move into your home home. Or, you could secure a residential bridge loan to borrow against the significant amount of equity you have in your existing home and use those proceeds to purchase a new home. You’ll be able to live in your current home while you look for the right place to live and go through the steps of buying your new home, removing the extra step of having to move while you sell your existing home. Most residential bridge loans are funded within weeks, which will give you enough money to be a competitive buyer in today’s market.

If you choose to obtain a residential bridge loan, you’ll have enough funds to provide an all-cash offer on your new home purchase, which increases the likelihood your offer will be accepted in a sea of competing bids. Once your offer is accepted and you move into your new home, you can sell your previous home to pay off your bridge loan quickly and seamlessly. 

Benefits

Fast Financing: Bridge loans provide hard money quickly, so you can fund your residental real estate purchase quickly. In today’s market, residential bridge loans can offer you the benefit of being able to purchase your new property quickly before it sells. Because houses are selling so quickly, you should be able to rely on selling yours quickly to pay off your bridge loan in a timely manner. You can secure approval in weeks rather than months, which can be crucial when you’re trying to move on a property investment quickly. 

Efficient: Residential bridge loans are efficient. Because it taps into your existing property’s equity, it allows you to secure your new residence quickly. This can help you avoid the hassle of trying to sell your current home and moving into a rental or temporary dwelling while you go through the traditional home loan process. With a bridge loan, you can move once, which saves time, hassle, and unnecessary moving expenses. 

Less Hassle: With a bridge loan, you won’t be required to prove your income as part of the qualification process. This is because residential loans don’t require the ability to repay loan term that most conventional home loans request, because you’re leveraging your existing property as collateral to pay off the loan once it’s been sold. If you’re self-employed, retired, or lack the necessary income to qualify for a traditional home loan, this is a great option to cut out the hassle. We also work with you if you have a poor credit history or past credit issues such as bankruptcy, loan modifications, or foreclosures. If you’re financially stable and have sufficient equity in the home you’re providing as collateral, we can work with you on your hard money bridge loan to find a solution that works. This is because as asset-based lenders, we’re concerned about the value of the property in question rather than your past credit issues.

Provides Leverage: When you secure a bridge loan, you’ll be able to have more leverage when making an offer on a potential home. Typically, all-cash offers are viewed as the most attractive option to sellers because they remove contingencies from the selling process. If you come in with an offer that’s contingent on the sale of your home before being able to complete your offer may be less likely to be accepted, especially in a competitive real estate market. Because you may not be able to sell your home to come up with the cash to put down, it can make for a shaky real estate transaction. With a bridge loan, you have the money you need upfront for an all-cash offer or large down payment.

Hard Money Bridge Loans

With a hard money bridge loan, we can fund your residential bridge loan request quickly and efficiently. If you are looking to secure a bridge loan for an owner-occupied property, we can handle the approval process in as little as 2-3 weeks. If you’re looking to fund a residential bridge loans on an investment property,we can assist with funding in as little as 5 days. If the loan amount you’re requesting maintains at least 25-30% of the overall equity in your property, we’ll be able to fund your loan quickly.

When you work with financial institutions that offer bridge loans as part of their loan portfolio, they must consider the value of the real estate and overall equity, but in many instances they also focus on the borrower’s income and past credit history. These can be used as leverage to increase interest rates or result in denials. It may also slow down the process, which can cost you time and possibly your dream home. While we look at your home’s overall equity, we don’t worry as much about your past credit and any delinquencies, loan modifications, or bankruptcies you’ve had. We can approve hard money loans in half the time of traditional banks by cutting out the extra steps in the loan process. 

We believe that just because you’ve had bad credit or issues on your record such as short sales, bankruptcies, foreclosures or loan modifications, it doesn’t mean you can’t qualify for a bridge loan. If your home has equity, we can look past these issues to help you secure a bride loan.

Even if you’re self-employed or have changed careers and have had issues in the past obtaining a loan from a traditional lender due to the inability to prove your income, we can assist you with the hard money bridge loan process. While most lenders require you to provide two years of employment history, we simply assess your property to see if it has adequare equity to use as collateral. 

Rates

When you work with a traditional financial institution, you may find that they tend to shy away from offering residential bridge loans because they prefer long-term loans. Since bridge loans are meant to provide short-term financing, it’s less profitable for traditional banks in the long run, which can affect their balance sheet. 

When you work with HML Solutions, you’ll find the interest rates on our residential bridge loans vary from 8-10%. Your bridge loan terms can vary depending on the factors such as the location of your property and the loan-to-value (LTV) ratio you requested. 

While you may be able to find a lower interest rate by choosing to work with a traditional financial institution to fund your residential bridge loan, you’ll find the approval and funding process will take much longer than if you worked with us. That’s because most banks spend additional time scrutinizing your income, credit scores and any past issues you you may have had which could affect your credit or ability to repay your loan.

HML Solutions is ready to assist you with your residential property financing needs, so get in touch with a member of our team today to learn more about our loan process. We’ll answer your questions, provide a financial consultation, and walk you through the application process from start to finish, so you can receive the necessary funds to manage your purchase needs. 

Using Hard Money Loans To Finance Rental Properties in West Palm Beach

The real estate market has always fluctuated, but there are some individuals that understand those ebbs and flows and use them to create wealth. In fact, successful investors in real estate understand how to use other people’s money to build their portfolios. With hundreds of options available to fund investments in property, building relationships with the money man is critical in today’s economy. That is why hard money loans, as a short-term financing option, are important for acquiring rental properties.

Defining Hard Money as it Relates to Rental Properties

Private investors offer hard money loans, and they are usually short-term. While banks use underwriters and extensive background checks to process their loans, hard money financiers don’t use this procedure to ensure the loan will be paid back. That means they often have a minimal process for approving loans.

Rental property investors use hard money loans to quickly turn properties around. The interest rates may go up to 18%, but the money can quickly be secured instead of waiting months for a traditional loan with an interest rate of around 5%.

When a property flipper finds a promising foreclosure, they can’t afford to wait months to obtain a bank loan because the property will be gone. Additionally, some borrowers don’t have perfect credit scores or crystal-clear backgrounds, making bank loans almost impossible to obtain.

Using Hard Money Loans When Purchasing Rental Properties

Since banks only finance a portion of the total loan amount, a hard money loan for rental properties can be a distinct advantage. In other words, when there is an amazing property deal available but you don’t have the cash required to front the deal, hard money is the way to go. What are some of the other advantages of a hard money loan?

  • Financing is easier to get than bank money.
  • No reams of papers to fill out to qualify.
  • Loans have flexible options.
  • Financing is short-term with no payback penalties.
  • Money savings on processing rental properties in turnaround time.

Valuing Hard Money Loan When Applied to Rental Properties

Financing hard money loans is as simple as using a formula. The lender looks at the value of the rental property, or the potential value when renovated, and evaluates the rent on the property. If the property’s after-repair value is high enough and the loan-to-value collateral exceeds 60%, the lender can begin processing the financing.

The formula looks like this for a $100,000 loan:

  • Mortgage Amount / Property Appraisal Value = LTV Ratio
  • Or
  • 100,000 / 160,000 = 62.5% LTV

When this formula is applied to financing packages for rental properties, it ensures the lender has enough collateral in the property to cover the loan if the money is not paid back. That means the quick money loan is a win for both parties.

Winning With Hard Money Loans for Rental Properties

Whether you are already a property investor, or you are just starting your first fix-and-flip project, you will need to find a reliable and trusted source in Florida like HML Solutions. As noted above, hard money loans are a great alternative to standard financing when you want fast money and convenient pay-back terms. Check out the benefits, and you will be sold.

Why Businesses in West Palm Beach Use Bridge Loans

There are a lot of different loan types out there, but are you familiar with bridge loans and the benefits they can offer you? Here at HML Solutions, we pride ourselves on our reputation as a trusted provider of bridge loans in West Palm Beach, Florida. We can help you understand whether or not this type of loan is the right solution for your current or future needs. Small businesses often choose this type of loan when they only need short-term financial assistance that they know they can pay off quickly.

How Bridge Loans Differ From Other Loans

If you’re looking for a standard loan, a bridge loan isn’t the right solution for you. A bridge loan isn’t meant to provide long-term financing. Instead, it’s meant to bridge a financial gap (as the name suggests). In fact, most bridge loans have maximum terms of 12-months, so you need to be sure that you’ll be able to pay yours off within that time. If you have any doubt about your ability to pay off your bridge loan within the specified time period, a long-term loan may be a better solution for your needs.

But there are certain situations when bridge loans work very well. They can be used to gain access to the money you need without unnecessary delays. Because they’re associated with less paperwork than traditional loans, bridge loans typically offer approvals more quickly than other loan types.

Benefits of Bridge Loans

Here are some of the reasons small businesses like yours decide to take out bridge loans in West Palm Beach, Florida:

  • They often provide funds in as little as 24 hours
  • They don’t require a long approval process
  • They help you keep your businesses working as it should while you figure out a long-term lending solution
  • Immediate influx of cash to put toward any purchase or pressing business need

As you can see, most of the benefits of bridge loans involve the speed with which they are approved. When you’re in a situation that requires you to come up with a large lump of cash fast, there’s arguably no faster way to get it than by taking out a bridge loan.

Potential Drawbacks of Bridge Loans

Though there are many benefits to getting a bridge loan, there are some potential drawbacks as well. You should be aware of these drawbacks so you can decide whether or not it’s still worth it for you to take out a hard money loan. Here are a few of the potentially negative aspects of taking out a bridge loan:

  • High interest rates
  • Usually require collateral
  • Short repayment period

When you apply for a bridge loan, you’ll discover that the interest rate associated with the loan is higher than that of a standard loan. This is partially because bridge loans require the lender to put in a lot of work. It takes effort to process a loan so rapidly. Additionally, most bridge loans require some sort of collateral. You’ll also need to make sure you can repay your loan within a short period of time. But if you’re in a situation that requires immediate cash, the benefits of a bridge loan may outweigh these drawbacks.

Best Situations for Bridge Loans

Small businesses use bridge loans for a variety of situations. For example, a bridge loan can help a business purchase a piece of real estate without going through the normal lengthy mortgage process. A bridge loan can help businesses take advantage of great real estate deals while they wait for long-term financing.

Without a bridge loan, you might have a very difficult time purchasing the right piece of real estate for your business needs. That’s because the real estate market tends to be very competitive, and if you don’t have the ability to purchase a piece of property right away, someone else probably will. Don’t worry, you can still work on securing a regular mortgage loan, but a bridge loan will give you the rapid funds you need to avoid missing out on a great real estate opportunity.

Another common scenario for bridge loans is when cash flow is tight. If your business is waiting for a number of large invoices to be paid, a bridge loan can help you meet payroll, purchase inventory and take care of other essential needs while you wait for your invoices to be paid. Once they’re paid, you can immediately put the cash toward repayment of your bridge loan. This is a wise thing to do so you aren’t stuck with fees and penalties for allowing your bridge loan to go unpaid past the end of its term.

Finally, if you’re in the middle of a round of fundraising, a bridge loan can help you in the interim. For example, if your company is in the process of raising a round of equity financing, but the funds aren’t expected to come through for another year or so, a bridge loan can help you meet your obligations in the meantime. While you wait for your funds to come through, you’ll still need to pay for rent, payroll and inventory. A bridge loan can provide you with the financial flexibility to stay in business until your fundraising is secured.

What You Should Know About Bridge Loans

At this point, you may be thinking a bridge loan sounds great and is exactly what your company needs. But before you apply, there are a few things you should know.

Bridge loans do tend to have higher fees and expenses than you would expect from a traditional loan. This is because the lender has to work very hard to provide you with the immediate funds a bridge loan provides. But you should consider the long-term gains your business will receive by getting an immediate influx of cash that will help you purchase equipment, real estate or inventory you might not be able to afford otherwise. There are situations where a bridge loan will put you in a much better financial situation down the road, so it’s important to think of the long-term game rather than focusing on higher interest rates in the short term.

Typically, you’ll be required to put some sort of collateral against your bridge loan. Sometimes, a bridge loan provider will simply ask for a first position lien on your assets. You may also be required to provide a personal guarantee that you intend to pay the loan off in good faith. Be aware of the collateral requirement before you apply for a bridge loan.

Often, you can receive prepayment incentives for paying your bridge loan off early. Check with your loan provider to see what incentives you can earn by paying your loan off as quickly as possible. You may be able to avoid extra accrued interest or receive a prepayment discount. Most importantly, make sure you meet the repayment terms so you can avoid paying unwanted fees and penalties. You never want to go past the agreed-upon repayment period for a bridge loan. To make sure this doesn’t happen to you, take time to ensure that you have a way to receive the funds you need to pay the loan off before it comes due.

As with any other type of financing, a bridge loan can help you meet your financial obligations as well as your business goals. However, just because it’s an available option doesn’t necessarily mean it’s the best option for your business. That’s why it’s important to learn as much as you can about how hard money loans work so you can determine if they are right for you or if you should go with another type of loan.

Finding the Right Bridge Loan Provider

When it comes to getting a bridge loan in West Palm Beach, Florida, small businesses have a lot of options. Here at HML Solutions, we work very hard to structure the most flexible and fair bridge loans on the market. We also take pride in how fast we close on our bridge loans. Our primary goal is to get the money to you as quickly as humanly possible so you can meet your business goals.

If you’re looking for a loan provider who will explain the pros and cons of bridge loans in minute detail, we won’t disappoint you. We want to make sure you understand the benefits as well as the potential drawbacks of any loan before you apply. When you’re well-informed of your loan options, you’re more likely to make a choice that’s the best fit for your professional needs.

Discover Whether a Bridge Loan Is Right for You

If you’re still wondering whether or not a bridge loan is right for you, please don’t hesitate to contact us. Our friendly loan officers are standing by to help you assess your financial needs so you can make an educated decision about the type of loan you wish to take out. To learn more about our bridge loans or any of the other generous loan options we offer, contact us today. We look forward to providing your business with rapid and reliable loan products that will help you meet your short- and long-term needs.

Using Bridge Loans for Business Acquisitions in West Palm Beach, FL

If you need a loan quickly and you don’t have time to wait for traditional loan approval, a bridge loan from HML Solutions may be the right solution for you. This type of loan offers very quick approval, but it’s only designed to be a short-term loan. Unlike most other types of loans, bridge loans do come with higher interest rates. That’s why they’re generally only recommended for certain situations, such as for business acquisitions. So if you want to acquire another business but you don’t currently have the cash flow to jump on the opportunity, a bridge loan can help, though you should be thinking about how you can pay it off within the short loan term allotted to you. 

How Bridge Loans Work

Before you decide to apply for a bridge loan, there are some things you should know. Here are our bridge loan basics.

  • Approvals are fast and provide you with cash flow in a pinch.
  • This is not the type of loan to apply for if you need long-term financing. However, it can bridge any financial gap you have while you wait for permanent financing.
  • Generally, the cost of a bridge loan coincides with the loan term. The shorter the term, the less expensive the cost of the loan.
  • Bridge loans come with a variety of fees, high interest rates and high collateral. That’s why you should make sure you’ll be able to come up with the money required to not only pay off the loan, but all fees and costs associated with it.
  • Collateral for this type of loan can typically include inventory or real estate.
  • Borrowers with good credit scores and low debt are likely to receive better bridge loan interest rates than borrowers with poor credit scores or high credit card debt.
  • Open bridge loans don’t already have funds lined up for loan repayment.
  • Closed bridge loans already have funds lined up for loan repayment.

If you have questions about applying for a bridge loan, we’d love to answer them. While this type of loan isn’t ideal for all situations, it can help you avoid missing out on appealing business acquisitions due to lack of funds.

Questions to Ask Before Applying for a Bridge Loan

Before applying for a bridge loan, here are a few questions you should ask yourself:

  • Do I really need a short-term loan solution, or is there a different type of loan that would be more appropriate for my situation?
  • Are the fees and collateral associated with this bridge loan worth paying? Will the business I’m acquiring be worth the risk of taking out a bridge loan?
  • Am I lining up long-term financing that I can use once I pay off my bridge loan?

Once you honestly answer these questions, you’ll have a better idea about whether or not a bridge loan is truly the best option for your current situation.

Learn More

We’d love to talk to you more about the process of applying for a bridge loan and determining if this is the right loan solution for your needs. Contact us today and we’ll help you schedule your obligation-free consultation.

How to use Hard Money Loans for Commercial Properties in West Palm Beach

Real estate investing depends on the speed of the transaction. As a highly competitive industry, it can often feel like the search for worthwhile commercial properties is a race to secure the best opportunities for significant profits. Because speed has a lot to do with securing investment properties, commercial hard money loans, like those offered through HML Solutions, have become a staple in the real estate market. 

Commercial hard money lenders strip away all of the complicated and redundant rules of conventional lenders to get to the heart of what clients need: funds to close on properties, profit from investments, and even fund rental or office spaces. Working with a hard money specialist will ensure you get a loan that suits your project’s financial needs.

Commercial real estate is the new gold rush, except with real financial rewards. However, to capitalize on the limited potential, you must learn to move fast, and part of moving fast is to find commercial hard money lenders you can trust, those with experience in the commercial niche.

If you are curious about how you can use hard money loans on your next commercial investment, continue reading. There are at least three ways you can use funds, but first, it is crucial to define a commercial hard money loan.

Defining Commercial Hard Money Loans

The primary thing to understand about commercial hard money loans is they are asset-based. Unlike conventional loans that are strongly credit-based, a hard money lender focuses on the investment’s property value. While some lenders will focus strictly on the current value, others will consider the after-repair value to determine overall loan value.

Due to the speed of commercial real estate transactions, hard money vehicles are an essential tool for property investors. However, the key to the effective use of such loans is understanding when they provide the most value. Whether you are looking to fix-and-flip properties or want a fast and flexible option for your next rental, understanding the primary uses of hard money loans will ensure you always get the most value from the experience.

Understanding Why Hard Money Loans are so Valuable To Investors

Conventional loans take time to process and approve, and the borrower often feels assessed and judged because they essentially are. Commercial hard money lenders take less interest in the person borrowing the money because the loan is asset-based, meaning it is secure, presenting limited risks to the lender. 

Because a hard money lender cares less about the creditworthiness of the borrower and more about property value, the approval process can happen in as little as a few hours. Often, a borrower can receive funds within one week or less. 

Most commercial real estate investors use hard money loans in specific ways. Some examples include:

  • Multi-family units
  • Warehouses
  • Office buildings
  • Retail facilities

Using a Hard Money Loan for Investments and Rental Properties

There is no secret formula for making more money. You need to increase revenue streams and continue adding to them to increase earnings. In real estate investing, the primary way to increase revenue is through rental properties. The more properties you own, the more income you have coming in, hopefully contributing to your net profits.

Many first-time investors start by purchasing single-family homes or duplexes, but the real profit and opportunity lie in multifamily properties. A multifamily property consists of four to five family dwellings in one building. According to the National Multifamily Housing Council, nearly 63% of all existing rental properties are multifamily units, meaning there is plenty of investment and ownership opportunity in the marketplace.

While some investors might feel motivated to purchase single-family homes for rental opportunities, there are drawbacks to such decisions. First, while rental income looks promising on a single-family home with less risk of tenant turnover, greater profit exists in multifamily properties. 

Consider a single-family home will rent for $2,000 per month. That is the extent of your profit. From that, you need to cover expenses from maintenance and property and business upkeep. Now consider you have a multifamily unit with five dwellings, each renting for $800 per month, bringing the total rental potential to $4,000 per month. Because the multifamily unit is still within a single property, maintenance costs and other expenses will remain similar to a single-family home, meaning profit potential is significantly greater with a multifamily unit.

Due to the availability and competitive nature of real estate investing, a quality multifamily property will not sit on the market for long, meaning that securing funding quickly is a priority. Out of all loan options available, no lender is quicker than a hard money lender. 

Besides the transaction speed, an experienced hard money lender like HML Solutions can provide insight into the current real estate market. Our experts might be able to offer suggestions for improving your investment opportunity, ensuring that everyone is happy with the arrangement.

Finding the Value in Commercial Property Investment

It is no secret that investing in commercial real estate – or any real estate for that matter – is a risk. However, the potential benefits are the reasons so many real estate investors are drawn to the commercial market:

  • Appreciating value
  • Low maintenance
  • Long-term tenants
  • Long-term revenue streams

Working with an experienced lending partner is crucial to ensuring your venture’s success, especially if you are not familiar with the industry or area of your investment. An experienced hard money lender like HML Solutions can help guide your project, keeping you focused on the future tenant rather than personal preference.

The Draw To Commercial Hard Money Lenders Over Banks and Other Conventional Institutions

Some people, especially amateur investors, might feel a little uncomfortable working with a private lender rather than a more conventional institution, like a bank. While it is true that hard money lenders offer loans with higher than average interest rates, the overall approval and funding process is significantly faster than traditional financial institutions. 

Conventional lenders require extensive underwriting and paperwork. They also require background checks, credit scores, investment plans, and several other things that slow down the process. By the time a bank finishes making borrowers jump through hoops, the investment opportunity might be long gone.

Commercial hard money lenders can take greater risks and have more freedom when it comes to the approval process because they are private lenders, and loans are asset-based, meaning less interest is placed on the creditworthiness of the borrower. Hard money loans often require higher interest rates because of the shorter terms on the loans, but if term lengths are flexible, depending on the project, sum, and refinance options.

Understanding the Three Uses for Commercial Hard Money Loans

Thus far, we have discussed hard money loans for multifamily investments and commercial real estate. The third use of hard money loans is as a bridge loan to fund the gaps between the sale of one property and the purchase of the next. 

Bridge loans are fairly common in commercial real estate investment. Using a bridge loan, an investor can refinance one property and use the funds to purchase another. However, more often, a bridge loan is used in one of three ways:

  1. Finishing a project
  2. Getting the property ready for the next stage in the investment
  3. Preventing foreclosure

Sometimes a bridge loan is used to purchase foreclosures at auction. An investor uses a cash-out refinance on one of their existing properties, providing them with the capital necessary to make a cash offer during an auction. While you might think it would be easier just to get a loan for the prospective property, that is not how foreclosure auctions work.

Auctions require cashier’s checks to place bids. A hard money lender will not offer a loan and is not permitted to provide a loan for such bids. A lender needs title insurance and escrow to secure their bottom line in a transaction, and an auction does not provide either.

In Summary

Hard money loans make it easier to invest in commercial real estate. Lenders provide fast and flexible loans to accommodate quick-moving deals. There are at least three ways to use a hard money loan:

  1. Investing in multifamily properties
  2. Investing in commercial facilities
  3. Bridging a funding gap

Why Choose HML Solutions for Your Hard Money Lender

When you are looking for a custom lending solution to secure a fast commercial real estate investment, you need to work with an experienced lender. HML Solutions is a trusted name in the industry, and our lending experts have the expertise to customize a funding solution that works for you. Better still, they can work with you to secure approval and funding within a week, in most circumstances.

We know that your project should mean more than your credit score, and we are prepared to look beyond most issues. We care most about the potential of your project and the value of the existing property. Why work with a conventional lender when a hard money option gets you the approval you need fast with little hassle. Contact an HML Solutions representative and ask them about our loan programs and how we can help make your investment goals a reality.

Property Flippers in West Palm Beach Prefer Hard Money Loans

Flipping houses can be a great source of income, especially if you know how to spot a good deal and keep your costs low. It’s also important to have a flexible source of financing you can use to help you acquire various fix-and-flip projects. Often, homes that are ripe for renovation are snatched up quickly by people who want to turn a quick profit. That’s why you need to be able to get a loan quickly, so you don’t miss out on any great opportunities. Here at HML Solutions, we offer hard money loans for situations like this. Unlike standard loans, a hard money loan is only meant to offer short-term financing. As long as you complete your fix-and-flip project and sell the home for a profit before your loan terms end, you’ll be in good shape. 

Why a Fix and Flip Loan Is Better Than a Traditional Loan for Flipping Houses

You may be wondering why you can’t just take out a traditional loan for a fix-and-flip project. The answer is pretty simple: most mortgage lenders don’t offer financing for such projects. Even if you could get a traditional mortgage loan, it would be the wrong fit for a fix-and-flip situation. You don’t need to get a 30-year mortgage on a house you don’t plan to own for 30 years. In fact, if you manage your project well, you’ll probably fix up and sell the house within a year. That’s why short-term financing is ideal. 

People and businesses who flip houses regularly are better off going through a hard money lender for the type of financing they need. Our hard money loan solutions offer rapid financing, but they do need to be repaid quickly if you want to cut back on costs and fees. You can use a hard money loan for the duration of your project. Or, if you think your project may take longer than a year, you can use a hard money loan to help you acquire the property you want, then replace it with a source of long-term financing once you have the time to do so. 

How Fix-and-Flip Loans Work

Most hard money loans for flipping houses have 12-month terms, though some offer terms as low as six months or as high as 18 months. Some even come with an initial term, but also offer an extension option if you aren’t able to pay them off at the end of the term. 

You’ll find that some fix-and-flip loans come with fixed interest rates, while others come with variable interest rates. However, almost all of them are structured as interest-only payments until the loan comes due. At the end of the loan period, the entire principal balance is due. This is also known as a balloon payment structure. 

To make this simpler, if you have a 12-month hard money loan, your monthly payments will only go toward interest until the end of the 12 months. At the end of the loan period, you’ll need to pay the entire loan balance at once. 

When you take out a loan for flipping a house, the amount will be sufficient to cover the entire project cost (which includes repairs, renovations and the cost to buy the house). The maximum allowable amount for the loan depends on the lender you go through. However, most lenders calculate the maximum allowable amount through either of these approaches:

  • Loan-to-value (LTV). Through this option, the loan amount is issued based on a percentage of the property’s projected value (once associated renovations and repairs are finished).
  • Loan-to-cost (LTC). When this approach is used, a loan amount is issued based on a percentage of the anticipated renovation cost. 

In most cases, you’ll be given the option that produces the smaller loan amount. This is beneficial to you because it gives you the smallest possible loan payoff amount. 

House-Flipping Experience and Loan Eligibility

If you’ve never flipped a house before, you may be wondering if you’re eligible for a house-flipping loan. Fortunately, previous house-flipping experience is not a requirement to get this type of loan from some lenders. However, you may find that some lenders refuse to work with first-time house-flippers. We’re not one of those lenders. As long as you meet our qualifications, we’ll extend financing to you even if this is the first time you’re venturing into the fix-and-flip industry. 

Down Payment Considerations

Most private lenders require that borrowers provide a down payment when getting a fix-and-flip loan. The amount of this down payment will depend on the estimated cost of repairs as well as the total cost of the home. Your lender may finance as much as 90% of the cost of your project, but is likely to finance only up to 75% of its after-repair projected value. Keep this in mind when you’re trying to determine how much of a down payment you’ll need to secure a loan for your project. 

Required Documentation

Most lenders require the same documentation when you apply for a fix-and-flip loan. Plan to provide the following:

  • Copy of your driver’s license or other ID issued by the government
  • Bank statements
  • Personal tax returns
  • Executed sales contract for the property
  • LLC operating agreement (if applicable)
  • Renovation and repair estimates from a licensed contractor
  • Documentation for previous fix-and-flip projects you’ve done

If you have any questions about the documentation you’ll need if you apply for one of our fix-and-flip loans, just give us a call. We’ll help you prepare to make the application as quick and easy as possible. When it comes to meeting our qualifications for a hard money loan, we do require a minimum credit score. However, the determination to extend financing is based more on the property in question and your plan to renovate it. We’ll take a look at the home’s after-repair value to determine if it’s realistic or worth financing. We’ll also analyze the renovation timeline and budget. 

Potential Drawbacks of Fix-and-Flip Loans

While fix-and-flip loans are ideal for very specific situations, they do come with potential drawbacks. Here are a few of them:

  • Fees. Fix-and-flip loans often come with a variety of fees that can quickly add up, including an origination fee. 
  • Carrying costs. When you consider all of the expenses that go into fix-and-flip loans, don’t overlook carrying costs. These costs include all the money you spend throughout your period of property ownership. To put this into perspective, if you own the property for 12 months, you’ll be paying insurance and property taxes for that year. If you also have a mortgage payment, it will increase your overall costs. As long as your property sells promptly and for the amount you expect when you finish your renovations, you should be OK. But you do need to plan for potential challenges selling the property or getting the price you want out of it. 
  • High interest rates. One thing you’ll notice about fix-and-flip loans is that they have higher interest rates than regular mortgages. The rates you receive as a borrower depend on current rate ranges as well as your credit profile and the value of the property in question. 

Getting a hard money loan can be very beneficial for certain projects, but it’s important to consider both the benefits and the potential downsides. If the benefits outweigh the drawbacks, then this type of loan may, in fact, be ideal for your needs. 

Getting a Hard Money Loan in the Name of an LLC

What if you want to take out a hard money loan in the name of an LLC instead of in your own personal name? Is this scenario possible? The answer is, yes. In fact, most hard money lenders prefer to extend hard money loans to LLCs. There are some that will not issue fix-and-flip loans to individuals at all. So if you don’t currently have an LLC set up, you may want to consider doing so if you plan to take out multiple fix-and-flip loans going forward. 

Credit Score Eligibility Information

You may be wondering what kind of credit score you’ll need to be eligible for a fix-and-flip loan. While all lenders are different, you’ll likely find that a minimum FICO score of at least 600 is required. This score falls into the “fair” credit category. Keep in mind that although this is likely the minimum score you’ll need, the higher your score is, the more likely you are to get good loan terms and rates. However, it can be comforting to know that you don’t need to have an exceptional credit score to qualify for a fix-and-flip loan. 

Learn More

If you aren’t highly experienced in fix-and-flip loans, you may find the terms to be confusing. If this is the case, don’t worry! We’d love to help you understand these loans better and how they can benefit you in certain situations. Don’t hesitate to contact us and rely on the expertise and knowledge of our friendly financial consultants. We’re here to help you choose the best loan product for your needs. Contact us today to schedule your obligation-free consultation or to request your application. 

A Comprehensive Guide to Bridge and Hard Money Loans for Entrepreneurs in West Palm Beach

For entrepreneurs, financing is a crucial aspect of success when launching a business. You must have the proper funding to get your business off the ground. Because there are several types of financing to choose from, you may have a difficult time deciding whether a traditional bank loan or an alternative avenue of funding is best for you. Although they can be more expensive than bank loans, hard money loans are a great financing option for many businesses. Here is everything you need to know to determine if bridge and hard money loans are the right financial solution for your company.

What Are Hard Money Loans?

A hard money loan is a form of financing that is secured by putting an asset up for collateral. These loans are most often used to finance real estate investment, and they are typically secured for short-term financing until the business begins to turn a profit and can fund its own investments. Although hard money loans are sometimes considered a last resort, they often play a crucial role in flipping real estate properties.

What Are the Terms for Hard Money Loans?

While the interest rates for hard money loans are often high, there is usually plenty of room to turn a healthy profit because this type of financing is short-term. The terms for a hard money loan vary among lenders, but you can expect similar terms to the ones listed below.

  • Low interest rates
  • Documentation, appraisal, application, inspection and document processing fees.
  • High LTV rates depending on the project
  • Generous terms

How Is Hard Money Different From Private Money?

Hard money and private loans are similar because they both provide financing by individual lenders rather than a bank, but they have several distinct differences. Private loans may be given for either short or long-term durations, but they are typically extended by people you have a personal relationship with such as friends or family members. This means the money can be used for any reason, but it is often difficult to build enough trust with someone for them to agree to loan you a substantial amount of money.

In contrast, hard money loans are extended by financial companies or individual investors who secure hard assets as collateral. The loans are primarily short-term and rarely last beyond eight years, so if you are searching for long-term financing, you will need to transition to a different type of loan as you near the completion of your hard money loan. This type of financing is most beneficial for helping fix or flip real estate properties.

How Do Hard Money Loans Differ From Traditional Financing Options?

Traditional lenders focus heavily on the borrower, while hard money lenders are typically more concerned with the assets. To receive a hard money loan, you will need to put up collateral, which is why this form of financing is so popular for real estate transactions. The piece of property in question serves as the collateral while you are free to use the money you receive to fix and flip the property before reselling for a profit.

This means that hard money loans are easier to qualify for because you simply need something valuable to use as collateral rather than perfect credit. Banks often limit the amount of financing they will extend to borrowers with multiple properties, while hard money loans have no restrictions. They are most often used for real estate purchases but they can be secured for other purposes such as equipment financing. 

Can Hard Money Finance Real Estate?

Hard money loans don’t require a perfect credit history or a W-2 income, which is why they are popular for real estate investors. However, they are not designed for long-term financing. If you are ready to invest in a rental property that does not need any remodels or renovations and you qualify for a bank loan, you are probably better off securing a lot with lower interest fees from a traditional lender. If you are trying to improve your credit score and do not qualify for a traditional loan yet, you may want to apply for a hard money loan with the intention of securing traditional financing once the loan period is over.

If you’re business works by purchasing and flipping unconventional properties and selling them for a profit, hard money loans are an ideal source of financing. These properties are not intended to stay in your possession for long and are usually sold before the loan period runs out. To ensure you can turn a decent profit, it is best to secure hard money loans that use the 70 percent rule.

What Is the Approval Process for Hard Money Loans?

Your chances of securing a hard money loan are higher if you start building relationships with lenders before you need the money. While these lenders do take credit score into consideration to determine approval, they do not base their entire decision on this one aspect. They are more concerned with seeing if you are trying to resolve any credit issues, which is why developing a working relationship with the lender prior to applying for a hard money loan is a good idea.

Hard money loans require less documentation than other types of financing. You will still be required to show your tax return information for the past two years and your credit score, but because so little paperwork is required, you can expect to close on a hard money loan within two weeks of being approved.

How Do Hard Money Lenders Determine Eligibility

Hard money loans are easier to qualify for than other types of financing, but they still have strict requirements to determine eligibility. Along with analyzing your credit score to determine if you are trying to resolve any issues, lenders also look at your budget and the scope of your project. If you are using the loan to flip a real estate property, the lender will consider the type of property you are working with, because certain properties move quickly and provide them with a better return on their investments.

After analyzing all of these elements, a hard money loan will determine whether or not you are approved for a loan. It is important to remember that you do not need a great credit score to qualify, but you do need to prove that you are managing any issues responsibly.

What Is the Exit Process for Hard Money Loans?

Hard money loans are processed similarly to other types of financing. Once the loan is approved and the contracts are signed, the lender will disperse the money in increments over the loan period. The borrower may be required to produce invoices and pictures of the project to prove that it is staying on budget. The borrower may request a disbursement as the project nears completion. If you think that there is any chance you may want to hold on to a property for longer than the term of a standard hard money loan, you are better off applying for a traditional bank loan because hard money lenders often will not extend the loan beyond eight years.

What Are the Advantages of Hard Money Loans?

The primary disadvantage of hard money loans is that they cost more than other types of financing. Although you may end up spending a lot on interest rates, hard money loans are advantageous for the following reasons.

  1. They can take over when traditional types of financing fall through when a property is under contract.
  2. They are quick and can often be closed within 10 business days.
  3. You can often qualify for a hard money loan even if you are not eligible for other types of financing.
  4. The approval process is less stringent than with traditional bank loans.
  5. They work with properties that many banks are not willing to finance.

What Should You Look for in a Hard Money Lender?

As in every industry, there are a few hard money lenders that want to see you fail so they can make more money on your loan. However, these lenders are by far in the minority. You can make sure you don’t end up working for one of the unscrupulous lenders by vetting them just as you would anyone else you choose to work with.

Striking up a professional working relationship with potential lenders will help you gauge their intentions. You can find candidates through the Real Estate Investor’s Association, and you can ask for referrals from your colleagues. The best way to determine if a hard money lender is reputable, however, is to look at past investments. Lenders with good track records on investments should be safe to work with.

A hard money loan is a great financial option for many businesses. While it may be structured differently than traditional bank loans, a hard money loan is often easier to qualify for. If you think this avenue of financing is right for your business, HML Solutions is happy to extend a hard money loan to help your company thrive in the competitive marketplace. Contact us today to apply.