Bridge Loans for Fixing and Flipping Multifamily Properties

Fixing and flipping properties can be a potentially lucrative opportunity. However, you will require a steady pipeline of projects. To help you achieve this, you might want to consider a fix-and-flip bridge loan. But what is this type of loan and is it the right choice for you?  Here are some of the things you need to know before you apply.

What are Fix-and-Flip Bridge Loans?

These loans also referred to as hard money loans, will allow you to make a down payment on your next project before the current one is sold. This is very prominent in the world of commercial property. It’s most common when you are able to obtain permanent financing for the new property but need temporary funds to secure the building. This ensures that you’ll always have a steady pipeline of work, so you’ll have a consistent income.

Many people will also use these loans to give them the funds they need to fix up the property and get it ready to sell. This can sometimes include bigger projects. For example, you might purchase a run-down home on a good block of land. You can then demolish it and rebuild a bigger property.

These loans will be secured against the value of the property. Once you resell the house, you’ll be able to use the proceeds to pay off the loan. Then, you will be onto the next project.

What are the Benefits of Fix-and-Flip Bridge Loans?

There are several reasons why someone might opt to take out one of these loans. One of the biggest advantages is how fast they are. Often, the application process will only take a few minutes. You’ll know whether you have been approved within two days. The money can be in your account within seven days. This will allow you to take advantage of any opportunities that come your way.

Another big benefit is how long these loans will last. These tend to have a much shorter duration than traditional loans. In the case of a hybrid loan, it might only last for between five to seven years. Usually, these lenders will be flexible. If you complete the project sooner than expected, you will be able to pay off the loan early.

These loans are fully secured by the value of the real estate. If you are unable to meet your obligations, the property can be repossessed.

Are There Any Downsides to These Types of Loans?

No type of loan will be perfect. There are a few potential downsides to consider. First, you might need to pay a higher interest rate, compared to a traditional loan. However, since you are using an alternative lender, there might be some room to negotiate. Another good way to avoid paying too much is by going through a reputable alternate lender. For example, the South Florida Funding Group has been providing fix and flip bridge loans and has established a good reputation.

The other downside is the shorter terms. While this can allow you to pay off the loan faster, it will put a tight timeline on the project. Because of this, you need to have a good idea of how it will become profitable. Because of this, these loans are only available to people who have more experience with investing in real estate.

Who Offers These Types of Loans?

By now you might be wondering how to get a loan to flip a multifamily property? You have two options. You can either turn to a bank or you can go to an alternative lender. Most people will opt for the latter. There are a few reasons for this.

First, banks tend to be very slow. It can be a few months before they will approve your application. By this time, the opportunity to purchase the property has often passed. Another problem is that these institutions will put a lot of emphasis on your credit history. This can make it harder for you to get approved.

Furthermore, most banks don’t like to have their money used to purchase a distressed property. They also tend to be reluctant to provide funds for flipping. Because of this, they might limit the amount of money they are providing. You might also have a harder time getting your application approved.

Because of this, you will need to turn to an alternative lender for this type of financing. They will be able to bypass most of these issues. They are willing to overlook poor credit. They tend to be more flexible. Because of this, you will be able to get a deal that will benefit you.

You must choose your lender carefully. You need to make sure that it is someone you can trust. It’s also important to check that you are getting a good deal. To do this, you’ll need to look at the interest rates. Check that they are competitive and that you will be able to make a profit when you sell the property.

How Can You Get Approved for a Fix-and-Flip Bridge Loan?

If you are interested in the prospect of getting this type of loan, there are a few requirements that you will need to meet. First, you’ll need to have at least two years of experience in the real estate industry. There are a few documents that you will need to provide to prove this experience. For example, you might need to show a real estate ownership schedule. You will also need to have a minimum FICO score of 600.

However, to apply for these loans, you will not be required to show your employment verification. There is also no obligation to show your tax returns.

You shouldn’t have any problems completing the application process. The good news is that an alternative lender will require less information than a bank application. This ensures that you will be able to get approval fast. As we mentioned earlier, successful applications will have the money in their account within seven days.

How Much Money Can You Get From a Fix-and-Flip Bridge Loan?

A fix-and-flip bridge loan is based on the Loan to Value (LTV) ratio. This is the maximum amount that the lender will offer, expressed as a percentage of the property. For example, let’s say that you have a $50,000 deposit on a property that is worth $300,000. In this case, you will have an LTV of 83.33%.

The good thing about this model is that you will be able to get a lot of leverage. In some cases, you will be able to purchase the home with a deposit of as low as 10%. Plus, you will be able to get the funds needed to renovate the property and get it ready to be resold.

At South Florida Funding Group, the minimum amount you can borrow is $50,000. This extends to a maximum of $10,000,000. Before deciding how much to ask for, it’s important to crunch the numbers. You’ll need to make sure that you’re getting enough to purchase the property and complete the renovations. This means you’ll need to calculate all the costs you might face. For example, consider things like insurance, utilities, and closing costs.

Contact South Florida Funding Group

South Florida Funding Group has built a reputation as a trustworthy alternate lender. We offer generous loan amounts at competitive interest rates, making it easy to get the cash you need to flip the property. If you want more information don’t hesitate to contact our friendly team today on 786-544-2700. Or you can apply online for free.