Bridge loans are short-term lending options intended to cover a gap for about 0-12 months. Real estate investors use these types of loans to fund investments that they expect to flip or refinance within a year. Business and commercial real estate owners use bridge loans to help spur growth or cover cash flow while awaiting payment from customers.
Why Get a Bridge Loan in Nevada?
There are a lot of reasons you might want to get a bridge loan in Nevada. Two of the most common are real estate investing and bridging a business gap.
Real Estate Investing
The Nevada real estate market is hot, especially in Las Vegas. Prices have gone up almost 30 percent in the last year and continue to rise. In January 2022, most homes (71.3 percent) were on the market for 30 days or less, so homes are moving fast. With limited inventory and slow new construction, the trend is expected to continue for at least a year. A bridge loan can help you get the funds you need to invest in this hot real estate market.
Bridging a Business Gap
As we emerge from the peak of the pandemic and the economy recovers, many business owners are finding the need for quick capital. Nevada is leading the way in “economic momentum” with the highest year-over-year growth in personal income, employment, and population in the nation. Whether it’s making payroll as revenue starts to bounce back or investing in new equipment to grow the business, a bridge loan could help you cover the gap. To tap into these funds, borrowers can collateralize either residential or commercial real estate.
How Do You Get a Bridge Loan in Nevada?
Once you decide a bridge loan is the right path, you have a few options for securing funds.
Conventional lenders offer bridge loans, but much like getting a mortgage with a traditional bank, there are limits to whom they can lend to and why. If you pursue a bridge loan with a conventional bank, eligibility will depend on your credit score, debt-to-income (DTI) ratio, credit history, and other financial information.
Hard Money Lender
A hard money bridge loan is backed by equity. Hard money lenders have much more flexibility than conventional lenders and can help you with creative lending solutions. Eligibility is based primarily on your equity and ability to pay back the loan, not on your credit score or financial history. Hard money lenders are also licensed, so you can be confident in their qualifications.
Private lenders (both individuals and organizations) can use any criteria they want when deciding whether or not to finance a bridge loan. Private lenders don't often advertise, so they can be more difficult to find, and you typically need time to build a relationship. Relationships with private lenders can also sour if the deal doesn’t go well. This is an important consideration if you borrow from friends or family. When dealing with a private lender rather than an organization, remember that emotions might create a bias.
4 Tips for Getting a Bridge Loan in Nevada
If you’re considering a bridge loan, plan ahead with these tips to get the right deal for you.
1. Prepare your pitch.
Any lender will want to know why you want the loan and how you intend to pay it back. Be prepared with details about the investment or reason for the loan, including how you expect to generate income from it.
2. Have financial documentation available.
Depending on which type of loan you decide to pursue, you may need tax returns, pay stubs, bank statements, and other financial documents. It’s a good idea to have these handy to save time during the application process, but hard money lenders usually do not require a robust financial package.
3. Explore your options.
Evaluate your options with multiple lenders to make sure you get the best deal for your situation. Remember that multiple factors play a role in finding the right fit, including interest rates, fees, loan terms, and time to close.
4. Understand your timeline.
If you need to act fast, it may narrow the list of lending options you want to explore. Conventional lenders take about 30 days to close. In today’s hot market, if you can offer a faster close, you’ll have an edge. Hard money lenders can close in as few as five days, giving you the advantage when you need it.
Secure Your Bridge Loan with Socotra Capital
As a licensed hard money lender in Nevada, Socotra Capital is here to help you get a bridge loan fast. Whether investing in real estate or meeting a business need, we can close in as few as five days so you can keep your deals moving.
Want to learn more about real estate investing? Check out our free guide, How to Grow a Passive Income Portfolio in Today's Market.