A hard money bridge loan is a short-term loan made by a private lender as opposed to a traditional financing institution, such as a bank. A hard money loan occurs when circumstances are not favorable for a Borrower to obtain a bank loan for various reasons, which is explained further in question 2.
The answer is frequently time-based. Say a Borrower has applied for a conventional commercial bank mortgage, but the time-of-the-essence closing date is rapidly approaching, the bank is still completing its due diligence, yet the Borrower must close in a timely fashion in order to avoid losing a hefty contract deposit. The Borrower therefore chooses to finance with a hard money lender, and then after this “bridge loan” closes, the Borrower can take as long as necessary to arrange permanent commercial financing.
Another scenario in which a Borrower would choose a private hard money loan involves the purchase of a vacant property that the Borrower plans to convert to another use (i.e. office to residential). A bank would rather finance the deal AFTER the Borrower has executed his business plan, rented the property, and created cash flow. A hard money lender is willing to get more deeply involved than most banks, evaluating the Borrower’s track record, the viability of the Borrower’s current business plan to convert/improve the property, as well as the Borrower’s personal guarantee or other collateral. The Borrower is also fully aware that he is only going to have the private hard money loan outstanding for approximately 12 months, and that paying a higher rate of interest for a brief period of time is much less expensive than bringing in much more expensive equity partners for the long haul.
W Financial can be a dynamic solution for many new development financings where an acquisition loan must close with building plans yet to be drawn and approved. We can even close an acquisition/bridge loan with pre-agreed terms and documentation already in place for the bridge to change into a mezzanine loan, which will then subordinate to a yet-to-be-identified first mortgage construction loan.
Two to three weeks from our receipt of requested materials is the average turnaround time for closing a bridge loan. We have closed private mortgages in less than one week from initial contact.
In order to compress the time frame please send us any appraisals, environmental reports, leases, a copy of the contract and other relevant documents to expedite processing. The complete checklist of items needed can be found here.
Since the principals of W Financial are experienced real estate professionals who have been successfully making and servicing bridge loans for over 17 years, we know how to respond to special situations where a fast closing is essential. We understand the issues that can stop many banks in their tracks, and we can see the hidden value that some transactions offer and find a way to work with you, the Borrower, to find an effective way to structure your deal.
W Financial is comprised of a professional and experienced staff of individuals, and we make it our business to respond to any situation in the most efficient manner.
In addition, we have excellent relationships with real estate vendors such as appraisers, who are always willing and able to respond to our time-crunch scenarios. For mezzanine loans we have intercreditor agreements already established with several banks, enabling us to close mezzanine transactions within a short time frame.
Finally, we are a privately funded institution therefore we always have money available to fund your loan. For more information on becoming an investor with W Financial, please visit www.PrivateMortgageInvestment.com or contact us.
W Financial provides bridge loans for all types of commercial properties.
- Multi-family / Apartment buildings
- Mixed-use properties
- Commercial and retail co-ops and condominiums
- Retail / Shopping Centers
- Acquisition of performing of defaulted notes
- Office buildings
- Warehouse / Industrial
- Our borrower must have a viable business plan and exit strategy along with relevant experience, net worth and liquidity.
Most of our loan terms range from 6 months to 2 years, but can go up to 5 years. We also offer options to renew.
W Financial primarily makes first mortgage bridge loansWe will consider second mortgages and mezzanine loans on a highly selective basis
A bridge loan is a short-term loan which “bridges” the Borrower’s plan from point A to point B. The Borrower only needs financing for a very short time frame so a long-term fixed rate loan is not the solution. For example, a Borrower may currently be in the process of selling his office building so that he can purchase a multi-family building, however the money from the sale of his office building has not come through yet and needs to close on the second property. Therefore, the Borrower needs a bridge loan so he can buy the second property, and then when the sale of the first property happens he can pay down the bridge loan.
A mezzanine loan can be a type of bridge loan in the sense that it is short-term and not permanent financing. However a mezzanine loan is not secured by property, it is secured by an ownership interest in the company that owns the property. This occurs when the Borrower needs more money than he is able to borrow against the property, so he puts up an interest in his company as collateral.
Attorney’s fees –
Credit & Background checks –
Title insurance – click here for a title cost calculator
Although every Borrower’s situation will vary, here is a checklist of items needed to get the process started. Not all items on this list necessarily apply to your transaction. If you have any questions about what you will need to provide, or need help gathering any of these documents, please do not hesitate to contact us.