The Benefits of Using a Commercial Bridge Loan for Your Real Estate Business.
You've found a "diamond in the rough" home in your real estate market and want to make it your next flip property. You're in great company.
Research shows that a typical house flip transaction generated a gross profit of more than $68,000 in 2021. That's a more than 32% return on investment.
What are your business financing options if you don't have enough money to buy a flip property outright? A commercial bridge loan may be an excellent option for funding your home purchase. Let's explore the benefits of using this type of loan.
Commercial Bridge Loan: What Is It?
A commercial bridge loan is one of the best types of loans for real estate professionals. You can use this short-term to buy property that may not be eligible for a conventional loan. That's because the property might present a safety hazard or need repairs.
Real estate investors use commercial bridge loans to cover renovation, upgrade, and repair costs. They then often replace their bridge loans with permanent financing.
Flexible Housing Qualification
A significant reason to choose commercial bridge loans compared with other loan options is its more flexible home qualification requirements. You can use the loan to pay for a property requiring extensive repairs due to being in poor condition. Even a home with a low occupancy rate may qualify for a bridge loan.
Another way to use a bridge loan is to acquire and develop raw acreage. Bridge loan funds may also fund flip properties. Renovate properties to increase their resale values and generate potentially massive profits with the help of bridge loans.
Flexible Credit Requirements
Another reason to choose a commercial bridge loan when financing your business is its flexible credit requirements. People with credit issues may still qualify for bridge loans even if they're ineligible for traditional loans, like mortgages.
You shouldn't have a problem getting approved for a bridge loan with a 650 or higher personal credit score. Requirements for a business credit score differ among lenders. Some don't enforce minimum score requirements if the applicant's overall application (including their current asset and profit numbers) is strong.
Quick Closings and Low Payments
Yet another reason to use a bridge loan is that you may receive your funding in 10 days. This is much faster than the two weeks to one month required for traditional financing.
Commercial bridge loans can also let you purchase properties without first making repairs, which traditional lenders often require. These loans' funding speed and repair requirement flexibility make them an excellent choice for real estate investors who want to close deals quickly.
How We Can Help You Get a Loan
A commercial bridge loan is more flexible than a traditional loan in several ways. Homes needing extensive repairs can qualify for bridge loans. You may also be eligible for these loans if you have credit problems.
Another reason to choose a bridge loan is that you'll receive your funds relatively quickly. There's no need to repair your target home before receiving the funds.
We offer top-tier bridge financing at Modern Asset Partners. Our bridge loan process is quick and efficient. Apply for a loan today!