Hard Money Bridge Program

A bridge or “hard money” loan is a short-term loan that provides financing to acquire or refinance a property when traditional financing solutions are unavailable or impractical. Common scenarios include when you need to close fast, where the property’s income is unstable, or where the property needs extensive renovations. Bridge loans are typically arranged quickly, even in a matter of a few days, with relatively little documentation. As private short-term loans, they carry higher interest rates and fees versus conventional or permanent financing (e.g., through a bank), and can be arranged with non-recourse to the sponsor based on the certain characteristics of the transaction.

A bridge loan can be used to finance the acquisition of the property, as well as improvements or renovations. Typically, after acquisition, and following the completion of any renovations or when the property is stabilized, bridge loans are refinanced with permanent financing such as through a bank or institutional conventional lender. Essentially, hard-money loans are used to “bridge” the gap until permanent financing is available.

Program Overview

Loan Amount: $500,000 +
Term Length: 6 - 36 months
Max LTV: Up to 70%
Amortization: Interest only
Interest Rate: Starting at 7.99%
Closing Time: 1 - 3 weeks
Loan Use: Purchase, refinance, cash-out,
construction, renovation
Recourse: Non-Recourse & Recourse

Pros And Cons Of Fannie Mae
Small Balance Loans

Pros

  • Low Rates & Costs
  • High Leverage (80% LTV)
  • Long Amortizations (30-yrs)
  • Cash Out Available
  • Variety of fixed rate products
  • Non-recourse
  • Limited Personal Financial
  • Flexible Prepayment Options
  • Assumable & Streamlined

Cons

  • Conservative Underwriting
  • Sponsor Liquidity
  • Requirement
  • Longer Closing Process
  • Property Must be Stabilized
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Pros and Cons

Pros

  • Flexibility
  • Quick closing
  • Interest-only payments
  • Wide range of property types

Cons

  • Higher interest rate
  • Higher fees
  • Short term
  • Limited leverage

What Do I Need To Qualify

  • Plan to acquire
  • Exit strategy
  • Cash to close

Disclaimer: These are general qualifications. Other information might be considered during your application

Eligible Properties

Multifamily

Multifamily

Mixed Use

Mixed Use

office

Office

Retail

Retail

Industrial

Industrial

hospitality

Hospitality

vacant land

Vacant Land

Other eligible properties include: Self storage, senior housing, marinas, parking facilities, automotive

Common uses include: Acquisition, refinance, cash-out, renovation / construction

Required Documents

Property Documents

  • Rent Roll
  • Leases
  • Income and Expense Statements
  • Renovation Costs / Project Schedule

If the property is investment real estate.

Personal Documents

  • Personal Financial Statement
  • Bio / Resume
  • Proof of cash to close

Business Documents

  • Business Plan / Exit Strategy
  • Current Profit & Loss Statement

If the property is occupied by an operating business that is the borrower

Is a Bridge or Hard Money Loan Right For Me?

Need to close fast?

A bridge or hard money loan might right for you.

Scenarios Meant For Bridge Loans

  • The property has low occupancy rates
  • The property has below market rents
  • The borrower’s credit profile needs improvement
  • Limited time to close
  • Incomplete ownership / project team in place
  • Land acquisition for later development

Required Documents

Personal Documents

  • Personal financial statement
  • Personal tax returns (3 yrs.)
  • Bio / Resume

Business Documents

  • Profit & loss statement
  • Balance sheet
  • Corp. tax returns (3 yrs)
  • Bank statements

Docs For Investment Real Estate

Stated Income Case Study

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Read the full case study

Fees and Costs

  • Origination Fee: Negotiable, but typically 1.0% - 4.0% of the loan amount
  • Exit Fee: Negotiable, but typically 0% - 1% of the loan amount

Prepayment Penalties

Negotiable, but typically the lender will require at least 6-12 months of interest.

Borrower Entity

Investment Real Estate: The borrower entity must be a single asset, single purpose entity. The typical structure is a limited liability company. The sponsors will typically form the entity in connection with the closing process, if not otherwise already formed.

Owner-Occupied Real Estate: The borrower entity is the operating business. The business generally must have been in existence for at least 2-years. The ultimate property owner may be a holding entity owned by the business or the business owner and it will be a co-borrower and the mortgagor.

Recourse

Some bridge lenders will require recourse from individuals with at least a 20% or more ownership interest in the borrower entity. Other bridge lenders may only require limited guarantees or bad-boy carveout guarantees. Non-recourse availability will depend on a variety of factors, including risk, property type and location, loan amount, among others.

Third Party Reports

Property related reports, such as an appraisal, property condition report, and environmental screen, are usually required, but may be waived when time is limited.

Approval Process

1. Create loan request here.
2. Supply preliminary documents.
3. Select a loan program and product.
4. Receive preliminary approval.
5. Review and accept term sheet; remit application fee.
6. Lender completes underwriting and orders appraisal.
7. Loan approved. Final terms reviewed and accepted.
8. Loan closed and funded.