Everything has its purpose and so does property bridging finance. This financing method has gained quite a lot of prominence over the years with the real estate industry describing it as a very powerful tool for buyers and investors. It has, in a way, changed the landscape forever and gave acquisitions a new perspective. But when it is best utilized?
#1: Pre-purchase Needs and Acquisition Requirements
Property bridging finance can be used in many ways and perhaps its most popular application happens in the initial stages of a real estate acquisition. Most people would make the mistake of assuming that they only have to worry about the price of the asset as it’s listed on a selling advertisement. Let’s take note that there’s more to every property’s price tag than just its list price.
There are a number of initial or pre-purchase expenses that need to be fulfilled before the transaction is set to roll. For example, one will have to spend some resources in looking for the right assets and coming up with a shortlist of the best ones. Hiring professionals such as lawyers for legal requirements and surveyors for asset examinations will cost some too. Moreover, sellers will require a down payment before anything else and if one needs to buy more time to come up with the cash for that, a security deposit will be made to prevent others from stealing the opportunity right from under one’s nose.
But hey, we’re just getting started. We’ve got two more applications on this list.
#2: Foreclosure Fix
Missing out on installment payments for one’s house, land, building or any other real estate asset will garner a foreclosure. Depending on the agreement signed into by the buyer and seller, a certain number of failed payments will end up in a foreclosed property and nobody wants that. In cases where this is imminent and one has to come up with immediate resources to prevent it, a bridging loan becomes a very powerful and effective tool.
#3: Refurbishing and Renovation Needs
Bridging loans are also fairly used by people in their renovation projects especially when the refurbishing and updates done are in line with a planned sale or lease. Because no buyer or tenant will want a dilapidated or sad looking investment, owners need to raise the bar high and one way to do so is by renovations and upgrades and we all know these projects can rake up serious cash.