Hard money loans, also known as private loans, rehab loans, bridge loans and construction loans, are a form of financing available to purchase and repair an investment property. Hard money loans do not conform to conventional underwriting standards and are not typically offered by banks or mortgage brokers. One unique attribute of hard money is that financing is made available for the repair of the property in addition to the purchase cost. Another attribute is that the loan amount is based on the future “after repaired value” of the property versus the “as-is” value. Due to these factors a borrower can access a much higher amount of leverage for a distressed real estate purchase than what would be available through more traditional financing.
Real estate investors prefer hard money financing over traditional or bank financing for a multitude of reasons. One main factor is the speed at which they can procure the financing. A quick closing with fewer contingencies on financing can be a powerful negotiating tool when purchasing investment real estate. Another reason is that real estate investors typically make a higher return on investment with hard money loans due to the fact they can finance the repairs to the property as opposed to using their cash.
Start with the 30 second pre-qualification here.
Most hard money loans are short term to cover the time it takes to repair the property and refinance or resell it, however; if the borrower needs more time they often have to extend the loan for a costly fee and a sharp increase in their interest rate, or potentially the lender could call the note due giving the borrower just 30 days to somehow repay the loan in full of face foreclosure. Sherman Bridge Lending offers a product that can be repaid at any time and does not require a loan extension for 30 years. This feature gives the borrower the assurance and security that if the project doesn’t go exactly as planned they will not be placed in a difficult, urgent, and likely unprofitable situation.
Single family residential loans only. The property needs to be detached and below market value, the usual borrower is someone looking to become a landlord or rehab a property that can be sold for a profit. We do not provide funding for land or commercial real estate.
Most of the underwriting is performed on the asset you are purchase verses the individual, although a credit score above 600 and a minimum of $30,000 in liquid assets is required. The loans are not available to first time homebuyers, and the purchaser can not occupy the homes during the life of the loan. Loans are only made to real estate investors.
Currently, loans are available in Texas, Philadelphia, California, Florida, Georgia and New Jersey.
Yes. Sherman Bridge Lending will order all inspections. These will include an appraisal, survey, and home inspection. The borrower will not be responsible for providing any reports, and Sherman Bridge will not accept any submitted reports if the borrower does order one of the above.
Typically, loans close within seven business days from when the real estate investment purchase contract and rehab budget is received.
By appraisal, the appraisal is based on the scope of work and what the borrower plans to do to rehab the property. The appraiser will assign an after repair value of the home (ARV). In most cases, Sherman Bridge will loan up to 70% of the after repair value but not to exceed 85% of the purchase price plus 85% of the cost of repairs. However, some loan products are available to landlords that do not require a minimum down payment, and 100% could be obtained.
There is an initial rehab inspection to determine the scope of work, and subsequent inspections when draws are requested to determine if the appropriate work has been completed. The inspector will not release funds for uncompleted work, materials or appliances that are on site but not installed, or for work that requires to be redone due to poor quality or incorrect application.