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2020 Real Estate Lending Recap

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COVID-19 has thrown a proverbial wrench into seemingly every industry on a global scale. And while the real estate lending sector is no exception, investors should be aware that they still have options when it comes to obtaining financing to conduct property transactions and complete fix and flip projects.

 

Fix and Flip

Real Estate Lending

Fix and flip bridge loans–also referred to by real estate professionals as ‘bridge’ or ‘gap’ funding–are short term loans generally running from anywhere between six and twenty-four months in length. Gauntlet Funding has a number of options available to customize your bridge loan to help fund the purchase and repair costs of investment properties. These methods of funding can also be utilized to bridge the income gap many investors experience between the completion of renovations on a fix and flip project and the eventual re-sale of the property–essentially covering the home’s holding expenses while the rehabbed investment property awaits a buyer or the investor obtains longer-term conventional financing.

 

Bridge Loans

Bridge loans offer some distinct advantages amidst the ongoing COVID-19 pandemic. With the continued economic turbulence associated with this type of global crisis, a considerable number of fix and flip investors are opting to either temporarily halt their operations until the market stabilizes or scale back their transactional activity significantly. Others, however, have realized that there is actually an opportunity presented by the reduced housing inventory coupled with some of the lowest mortgage rates ever seen. This contingent of investors are confident they will be able to meet a specific need in these trying times by offering like-new housing options to the market for a surge of eager home buyers–many of whom are struggling with the extremely limited inventory and lack of new construction options in their respective local real estate markets. For these fix and flip investors, choosing to continue their business operations during the coronavirus pandemic, fix and flip bridge funding can offer a viable cash flow approach and function as a buffer against unanticipated delays or complications associated with doing business in the COVID-19 marketplace.

 

Things To Consider

Before 2020, the approval process for fix and flip bridge loans revolved mainly around the value of the underlying property. The borrower’s credit score, financial status and industry experience, while still considered by the lending entity in the past, are significantly more important factors now in acquiring funding as opposed to before COVID-19. These variables are being more heavily scrutinized based on the perceived risk by lenders of the volatile market, and borrowers should accordingly be prepared to find that bridge loan underwriting protocol have become somewhat more stringent as compared to what they were before the global pandemic. If you are an experienced investor with several lucrative renovation and resale projects under your belt and your financial status confirms your ability to make on-time interest payments on your mortgage, a lower-than-average credit standing may not necessarily be a deal breaker in obtaining a bridge loan to fund your next investment move. Keep in mind that it is always important to be proactive and reach out to communicate with your lender to go over any changes to their bridge loan prerequisites that may impact your investment plans.

 

What We Can Do

Real Estate Lending

Although some hard money lenders have chosen to cease their loan options for first time fix and flip investors or scaled back their lending and refinance loan programs, that is not the case when it comes to Gauntlet Funding. Businesses are constantly seeking out access to capital and traditional banks and other lenders have not been able to meet this ever-present demand. Banks have been lending via direct lenders and see these platforms as a more efficient target to generate new loans. A major reason that businesses and real estate investors alike have preferred the direct lending model over conventional banks is their ability to respond quickly and underwrite deals. Regardless of these uncertain times, you can rest assured that the financial professionals at Gauntlet Funding are ready and willing to work with you to custom-tailor a financial package that checks all the boxes. Contact us today to see how we can help you get the money you need when you need it.

 

Learn More About Real Estate Lending

 

2020 Real Estate Lending Recap | Gauntlet Funding – Melville, NY


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