5 Advantages of Bridge Loans for Investors

Bridge financing, as the name suggests, serves as a “bridge” to another transaction. In our case, these loans have assisted real estate projects and have also allowed borrowers to pay off loans or take advantage of new opportunities quickly.

Bridge loan financing is a smart alternative for borrowers when traditional lenders are moving too slow or are too rigid. Hard money lenders, like Bankers South, offer speed, a professional service, and convenient short-term financing, helping investors to take advantage of great opportunities that do not fit easily into the tight structure of institutional lending. Regardless of if you’re a seasoned borrower or a newbie, Bankers South is here to assist you.

Through our Transitional Lending program we offer these non-conventional asset-based loans, often called hard money loans, which are based on collateral and can be beneficial for a variety of purposes.

5 Advantages of Bridge Loans:

  1. You do not miss out on an opportunity when a traditional lender (i.e. a bank) cannot close the deal in a timely fashion. Bridge loans are fast. When time is of the essence, a Bankers South bridge loan can make all the difference in securing an opportunity.
  2. The bridge loan holds you over until the property is sold. If you need to sell your investment property now, but know it may take a few months on the market to sell, a bridge loan is a great option.
  3. You can buy out an investment partner. Paying off a partner who is no longer interested in the real estate investment/partnership can have long-term benefits.
  4. Flexible payback may be an option. Proving adequate income to repay the debt is one of the requirements a borrower must meet. However, there is an option of utilizing an interest reserve if there is sufficient equity in the property to grant a larger loan.
  5. There are no concrete specifications for a bridge loan, as there are for conventional loan types. The bridge loan is provided by the lending company based on their own judgment and if it makes sense.

 

With our simple and competitive bridge loans, you have the advantage to respond quickly to business opportunities. Contact Bankers South for more information regarding Florida hard money loans and our Transitional Lending Program!


How to Secure Hard Money Loans

As mentioned in our last post, hard money loans offer entrepreneurs and businesses options when quick funding is required to finance a special project (usually with a quick closing date) – a project that more rigid, institutional lenders (banks) cannot efficiently and swiftly provide. That all being said, it’s important to be a prepared borrower when applying for any loan type from any institution.

Certain factors definitely influence the ability to secure hard money loan approval.

For example, the type of project matters. Hard money is collateralized with the property in question. Thus, finding prime property (i.e. good location, good type of land, etc.) is of importance to hard money loan lenders. Other factors that may or may not be weighed include cash on hand, a decent credit score, cross collateral, and real estate investment experience. Also, it’s important to be highly communicative on your end. Be on top of things. Return calls promptly. All of this ensures that you get the right funds at the right time.

Beyond this, it’s important to do your research and have a plan of action. Know the area you want to invest in. While hard money loans are primarily secured with the property, it may still be helpful to round up all of your relevant documents because you may be asked about credit, income, and assets. It’s simple: Be prepared. Talking to a contractor is also incredibly helpful to really get a sense for the repairs the property requires.

Lastly, have a solid strategy for either selling or refinancing your property before the term ends. Knowing how you plan to repay the loan is a core factor in a hard money loan lender’s approval decision.

If you cover these bases, you should have a relatively smooth time securing the funding you need to jump on this special project!

Need funding fast? Contact Bankers South! Through our Transitional Lending Program we offer non-conventional, fixed or floating-rate bridge loan types to finance special opportunities quickly. 


2 Myths About Hard Money Loans

What do you know about hard money lending? Do you have the facts straight?

Truth is, very few people, including businesses and borrowers, have the facts straight when it comes to hard money loans. Without this awareness, many misconceptions are floating around out there about businesses that offer and receive these loan types.

  1. MYTH: Borrowers seek hard money loans in moments of crisis.

    This is not the case. Individuals that seek hard money loans are by and large successful, solid entrepreneurs or businesses that require quick funding to finance a special opportunity (usually with a quick funding date) that more rigid, institutional lenders cannot efficiently and swiftly provide. The hard money method is a more convenient path in these impromptu situations because private lenders can deliver funding fast and be more flexible in structuring transactions. Asset-based lenders, like Bankers South’s Transitional Lending, review the collateral as the ultimate source of repayment rather than the borrower’s competence (income, expenses, credit history, etc.). As a result, private lenders make it easier for self-employed individuals and businesses without an established track record and borrowers without an immaculate credit history to get the funding they need when they need it.

  2. MYTH: Hard Money is too high-priced.

    Sure, hard money is generally more costly than funding options from traditional lenders, i.e. banks. However, in many cases, going with a hard money lender will actually be less costly for the borrower. For example, say a borrower is working with a traditional lender that won’t provide secondary financing. Say that borrower is without the equity the bank requires without secondary financing. This would mean that said borrower would need to bring in an equity partner – a more costly option than going with the alternative option: Going with a hard money loan lender.

 

Through our Traditional Lending Program, we offer non-conventional asset-based loans, i.e. “hard money” loans, based on collateral. These loans, as mentioned, can be used for a variety of purposes. Some of our clients have used our Transitional Lending Program to fund new real estate projects, pay off loans, or take advantage of an opportunity quickly with a bridge loan. We understand that a large amount of our borrowers are solid, successful individuals or businesses that are in a situation, or are presented with an opportunity, that does not fit easily into the rigid structure of institutional lending. That’s where we come in, offering you real salutations when special situations arise.


Florida Lending Continues to Climb

Though Florida interest rates are climbing, lending institutions are not taking a hit. Borrowers are still flowing in, willing and ready.

Here’s the numerical proof: According to recent 2013 data, lending in Florida has increased by $5.8 billion, or 6.5 percent, outdoing the 2.9 percent U.S. gain. That’s a pretty substantial gain.

Florida is clearly enjoying a unique phenomenon. In fact, the state’s banking industry is surpassing the entire nation, outranking all states.

Though mortgage rates are on the rise in Florida, housing demand has not dwindled according to certain indicators, including average sales and inventory trends. Yet, home buying is not the exclusive factor accounting for Florida’s uphill lending trend.

What, then, is fueling Florida’s lending increase?

As mentioned, home buying plays a role, but a very minor one. Not many home buyers are seeking loan assistance. Data suggests that home buying is probably increasing due to a higher percentage of cash purchases due to the higher-priced markets. So, home buying is not a strong game changer in the Florida lending industry. Commercial and industrial lending, credit cards and auto loans, are the proposed game changers strongly accounting for this uphill lending trend. Real estate loan growth, however, has been consistently low.

It’s hard to say how this high-priced market environment will impact banks. On one hand, it will make borrowing more expensive for banks. Yet, banks have the power to counteract this by increasing their loan rates. Striking a balance is necessary, though difficult.

Moral of the story: Florida financial lending intuitions are doing well, amidst an environment that generally limits borrowing. How this will play out long-term is difficult to predict. Yet, so far, so good for lenders and borrowers.

Based in Central Florida, Bankers South Lending & Finance, LLC (“Bankers South”), a Land South Group Company, is a money lender and mortgage investor. Bankers South provides a variety of loan products, including conventional agricultural loans, timberland loans, and commercial farm loans, and non-conventional, fixed or floating-rate bridge loans on asset classes such as Agriculture and Timberland, Residential Development Land, and Transitional Commercial Assets. Contact us for our ag lending services, information on Florida asset-based loans, and more!  


Hard Money Loans: 5 Facts Investors Should Know

As a hard money lender, Bankers South offers the Transitional Lending Program for non-conventional, fixed or floating-rate bridge loans on the following asset classes:

  • Agricultural Land and Timberland
  • Residential Development Land
  • Transitional Commercial Assets
    • Office
    • Apartments
    • Industrial
    • Retail
    • Hotels
    • Student Housing
    • Public Storage
    • Medical Offices
    • Existing performing and non-performing loans

It’s important to know that hard money loan lenders operate rather differently than traditional lenders. As private lenders, the terms and guidelines that hard money lenders follow are unique to that particular institution.

Here are some quick, simple facts all borrowers should know regarding hard money loans:

  1. What is a hard money loan? A hard money loan is a loan in which the investor receives financing based on the value of a property as opposed to the traditional lending conditions that banks typically assess such as credit scores, tax returns, and income statements.
  2. What are residential hard money loans? These are short-term bridge loans for investors who need to close swiftly. They are good for real estate acquisitions, refinancing, and foreclosures.
  3. What are the interest rates like as compared to traditional lending? Hard money loans usually carry higher interest rates because hard money lenders are not directly competing with traditional lending sources. However, these loans will usually keep borrowers from going into bankruptcy and foreclosure, thus saving their property.
  4. How secure is the investor? Bankers South hard money loans are secured by a property with 30% -50% equity, so the investor is well protected.
  5. Having difficulty finding traditional financing in time to save your investment property? A hard money loan may be your solution if your credit is less than perfect. Sure, the interest rates are higher, but you have the power to act fast and secure your investment property so you can flip and receive your profit.

 

Do you have more questions on hard money loans? Contact Bankers South Lending & Finance
for additional information regarding our Transitional Lending Program.

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