You’ve found the perfect house to buy, rehab and sell to another buyer. However, you’re a little short on cash. It might be time to look into bridge loans or hard money loans to help you fill the gap.
Bridge loans and hard money loans from Barrington Commercial Capital could provide the funds you need to capture that house or property before another investor snatches it up.
If you’re wondering which type of loan is right for you, take a look at this overview of bridge loans vs. hard money loans.
What Are Bridge Loans?
A bridge loan is a short-term loan that acts as a temporary source of funding. For example, as a real estate investor, you can use a bridge loan to purchase another home before you sell a home you’re holding. You’d use your current investment home as collateral, taking out up to 80% of its current value. If approved, you could receive the loan within 10 days.
Some lenders allow you to make interest-only payments on a bridge loan while working through selling your other investment home. Once that home sells, you can use those proceeds to pay off the loan.
A bridge loan for a business could help fund an acquisition, pay for operations or pay for inventory.
Here are a few facts to consider about bridge loans:
The bridge loan approval process is also typically faster than traditional loans, making them ideal for investors who fix and flip properties. And although these loans come with higher interest rates, it doesn’t usually matter to investors since their strategy revolves around acquiring the property, renovating it and turning around to resell it within a short amount of time.
What Are Hard Money Loans?
Hard money loans are short-term loans similar to bridge loans; however, the two differ in several ways. Lenders of hard money loans are private investors or companies that focus less on creditworthiness. Real property is used to secure these loans.
Here are the characteristics of a hard money loan:
Hard money loans are also often used by real estate investors such as house flippers or developers. Again, flippers typically don’t mind these higher interest rates because they plan to sell the home within a year.
Check Out Bridge Loans or Hard Money Loans Today
Whether you’ve been denied a loan or you’re looking for quick short-term funding for your investment property, a bridge loan or hard money loan might be the financing vehicle that fits your needs.
At Barrington Commercial Capital, we provide short-term loans for real estate investments of every kind. And if you need to move from a temporary loan to a permanent solution, we can help regardless of whether we assisted you with the original loan. Reach out to us today.
