Why Real Estate Investors in South Florida Should Use Bridge Loans

Why Real Estate Investors in South Florida Should Use Bridge Loans

The real estate market in South Florida is very active. A favorable confluence of a good economy, great weather, and people from other states moving to the region in droves have contributed to this trend. Real estate investments in South Florida are in vogue and quite lucrative at this time.

Here at HML Solutions, we want to partner with real estate investors. Although the opportunity for profits abounds, it may require a bit of up-front capital to obtain the investment properties that you have in mind. Not everyone has sufficient cash in the bank to purchase a good real estate investment. But, we don’t think that that should deter you.

We believe that bridge loans are one of the best financial vehicles for real estate investors. These are short-term loans, generally with terms of up to 3 years, that are particularly suited for the real estate market. These highly flexible loans are designed to provide quick funding, perfect for a busy real estate market in which properties can move quicker than jackrabbits.

In fact, one of the main benefits of bridge loans is their inherent flexibility. The most commonly are used to facilitate the quick closure of a property purchase. They can also be used for a host of other costs associated with real estate investments. 

We believe that quick-funding bridge loans are better than traditional loans for most real estate investment opportunities. The application process for traditional loans from a bank can take a lot of time and is usually quite intrusive. After the application is finalized, there is a waiting period for approval, after which you may be denied.

Contrast that with bridge loans that provide funding quickly and can be tailored to each investor’s specific purpose and situation. We believe that there really is no comparison.

Sell Then Buy: A Typical Real Estate Technique 

For many real estate transactions, an individual will sell a property that they already own, then use the proceeds to buy the desired investment property that they have in mind. The problem with this approach is that the property being sold may move too slowly to provide the funds to capture the new real estate. Many opportunities are lost because of this.

We believe that loans that “bridge” that typical funding gap make good sense for many real estate investment transactions. A bridge loan provides a clear solution for you to take advantage of these excellent opportunities that you would otherwise be forced to pass on. Our bridge loans offer fast approval and funding, so the seller won’t even know that you need financing to complete the deal. As far as they know, you are flush with cash.

Benefits of Bridge Loans

We believe that you will find a number of hard-to-beat benefits when you obtain a bridge loan from us. Many of these features can be customized to fit hand-in-glove with your personal investment and financial situation. These benefits include, but are not limited to:

  • Loan Structure Optionality. We offer both fixed-rate and variable-rate bridge loans to the real estate investment community. The best choice for you will be dictated by your personal situation. We can help guide you to the best option. 
  • Low Rates. The interest rates we charge on our bridge loans are highly competitive with other lenders. You can save money with us because of our attractive rate structures. 
  • Interest-Only Loans. We offer interest-only bridge loans. This may be particularly attractive, especially if you expect to pay off the loan in short order, perhaps when the sale of an existing property is expected in a few weeks or months. Interest-only loans do not carry a principal component in the periodic payment schedule, hence they can be much cheaper for the investor taking on the loan.
  • Asset-Based Loans. Our loan programs include asset-based collateralized bridge loans. This may be a preferable option if you have a number of producing properties in your investment portfolio or if your credit history is less than stellar. These types of loans are backed by the value of an existing property rather than by the investor’s ability to pay back the loan by other means.
  • Removal of Contingency. When a home sale contingency is embedded in a purchase contract, the deal may fall through if the buyer is unable to sell an already-owned property first. Our bridge loans can help circumvent the need for such a contingency.
  • Unencumbered Loan Payoff. We do not burden you with prepayment penalties of any sort. If you wish to retire your loan early, feel free to do so without any additional charge. Then, move on to assembling the next piece of your real estate portfolio.
  • Availability to Non-US Investors. We lend to foreign as well as American real estate investors. In particular for foreign investors,  many of whom may not have banking relationships in the United States or an easy way to verify their credentials, our bridge loans are an ideal funding solution. 

Additional Utility of Bridge Loans

Most bridge loans are used to buy properties. There are, however, additional reasons to obtain a bridge loan. Bridge loans could also be used for the following situations:

  • Securing a new tenant
  • Stabilizing the cash flow of the property, or
  • Resolving a short-term issue that affects a property

An example of a short-term, real-estate-related cost that can be addressed by obtaining a bridge loan is an environmental issue with a property that needs mitigation.

Avoid the Traditional Loan Hassel

As we mentioned, applying for and finally obtaining a traditional loan from a bank or credit union can be a burdensome and time-wasting process. A typical scenario, one which you will want to avoid, often follows a course like this:

The loan aspirant contacts a local bank with the desire to obtain a loan for a real estate purchase. He or she is given reams of paperwork to fill out, a credit check to wade through, and then told that the institution will get back to them. The length of time that you wait for a response can seem like an eternity if you are watching other investors attempting to secure the property that you have in mind. In more than a few cases, the institution may deny your application, and you are left high and dry without funding. To make matters worse, your prized property had been snapped up by another investor while you were waiting for approval.

Here at HML Solutions, we want to partner with you, not frustrate your investment goals. Our bridge loan application process is at the other end of the spectrum: it is easy to apply for and a loan decision is made quickly. We believe that the smart decision is to partner with us.

Exit-Strategy Considerations

We find that the clearer your idea on how you plan to pay off your bridge loan, the swifter your approval and funding will be. Our customers generally retire their bridge loans in one of three ways: Payment from the sale of an existing property, payment with funds from other sources, or refinancing with a conventional fixed-rate or cable-rate mortgage.

Be sure to think this through before applying for a loan from us. Depending upon your envisioned exit strategy, we can offer a tailor-made bridge loan that fits perfectly with your expected plan.

National Interest Rate Considerations

Interest rates have been quite low for some time now, making the cost of taking on a loan relatively low. Because of this, the here and now can be an excellent time to take advantage of our bridge loan program. There is no way to know when rates will rise, perhaps considerably. The rise of inflation in recent months does suggest, however, that rates may rise and make the cost of capital more expensive. Regardless of the overall rate environment, when you have your eye on a property, a bridge loan may be the best bet for your funding.

Aspects To Keep In Mind

We would be remiss if we didn’t touch on the following considerations. Bridge loans can be a near-perfect vehicle for many real estate investors because of their flexibility, quick funding, and easy application process. Keep in mind, though, that bridge loans may carry higher interest rates than other types of loans. We believe that this will not deter too many investors, because these loans are generally paid back quickly and the total interest cost can be relatively small. Also, if an investor has other loans or debts, the adding of an additional loan needs to be thought through carefully. 

Closing Summary

Bridge loans can be the ideal solution for short-term funding gaps that commonly arise when real estate investments are under consideration. Here at HML Solutions, we strive to help investors overcome any funding shortfalls that they encounter. If you are looking to purchase residential, industrial, commercial, or land assets, we are here to help. Our bridge loan program provides highly flexible funding with speedy approval and quick arrival of capital.  Don’t let a shortfall of cash thwart your plans. Give us a call today and keep your investment program on a firm footing.