South Florida is a prime location for investing in commercial real estate. Properties ripe for acquisition and rehabbing abound and the demand for real estate is high. The key to success is finding the financing you need when you need it. HML Solutions provides loans for property acquisitions and renovations. These bridge loans give you short-term financing up to three years, after which you can refi or sell the property.
How Investors Can Use Bridge Loans
Bridge loans are commonly used to finance the acquisition of and improvements to multifamily housing. If an investor purchases a 90 percent occupied property with the intention of updating the kitchens and baths, these renovations will have to be done over time.
The bridge loan allows the renovations to move ahead while the owner organizes long-term financing. When they are finished, the property has more value and the owner can raise rents, making the property more attractive for long-term financing options.
Loans insured by the U.S. Department of Housing and Urban Development are an excellent way to finance a property in South Florida. The main drawback is that they can take a long time to get. A typical time frame for a HUD loan from application to receipt of money is four to six months. That’s just too long for some developers to wait.
A bridge loan can be used for the purchase of the property and paid off when the HUD loan comes in. This enables investors to move quickly on great properties when they show up on the market. HML Solutions will even underwrite the HUD loan application as a part of the process.
Bridge loans are great tools for investors utilizing the Low-Income Housing Tax Credit in South Florida, which can take a year to complete. They can also be used to hold a property while the owners evaluate the resell market. In short, any time an investor needs money quickly, a bridge loan fills in the gap.
Bridge Loan Guidelines
Because bridge loans typically include underwriting for long-term financing, they have similiar credit criteria to other commercial loans. For example, HML Solutions will evaluate factors such whether the market can support a rise in rents. It’s important to ensure that investors can secure permanent, long-term financing at the end of the bridge loan.
Investors are usually required to have 10 to 20 percent equity in the project. You will also need a solid business plan and a good net operating income. If you will be adding value through renovations or raising rents, these things will also factor into the loan.
HML Solutions offers great terms and conditions on bridge loans in South Florida. Most are adjustable-rate mortgages where you will make interest-only payments. If you pay off the loan early, you only have to pay six months interest with a one to two percent exit fee.
If you want excellent leverage for your next property acquisitions, get a bridge loan from HML Solutions. They give investors the time and money they need to bridge the gap between finding the deals and financing the deals.