What Is a Bridge Loan?

What is a bridge loan, and how should a real estate investor use it?

Let’s get the obvious out of the way first: they are not used to buy a bridge.

Then why are they called a “bridge loan”? Because they’re short-term loans that bridge a gap left by other financing or by the timing of your investments.

How Does a Bridge Loan Work?

Bridge loans fill a need for short-term capital. These loans have a short duration and cover a gap from:

  • Hard money to long-term financing.
  • One property selling to buying another.
  • Covering a down payment or closing faster on a new property.

They’re always secured by your current property. For most bridge loans, you pay them off between a few weeks to a few months later.

When Is a Bridge Loan a Good Idea?

You can use bridge loans to purchase a property while waiting on another property to close. Once the first property sells, you use that money to pay the bridge loan off.

The loan works perfect when a bank is dragging its feet to close a loan, or asks for another 30-60 days for processing.

As long as there is a property with good equity available, you can use it as collateral for the bridge loan.

More Info on Real Estate Investing

Hard Money Mike has been assisting real estate investors for over 20 years. If you have questions about bridge loans, we are always here to help.

Not looking for bridge loans? You can also ask us about hard money, traditional lending, setting up bank lines of credit, and more. Email us any questions at Info@HardMoneyMike.com.

For more real estate investing resources:

If you get connected, you accelerate your cash flow. Happy Investing.

What Are Property Values?

What property values should you know as a real estate investor?

In real estate investing, there are several values you need to know when looking at a deal so you can understand your potential profits and cash flow.

The better you know your values, the more likely you are to be a successful investor.

5 Kinds of Property Values Investors Should Know

Let’s go over the 5 main values you need to know. To find any of these values, you must compare like-properties in like-areas to get an accurate number.

1. As-Is Value

This is the market value of the property in its current condition. Aka, what you could buy it for right now. With no repairs, no updates, and no other conditions. You take it as it sits with this value.

2. After-Repair Value (ARV)

This is the estimated future value of the property once all repairs and updates are completed. This is a major value used in fix and flips and under-market rental purchases (think BRRRR).

ARV is contingent on the quality and quantity of work completed on the property. It is not a true market value but a guess about what it will be in the future.

3. Appraised Value

This is the value of the property as determined by an appraiser whenever they do an appraisal. Lenders use this value to determine the current amount they can lend on.

The appraised value is usually based on comparisons, like homes that have sold in the same area within the last 6 months. It’s also based on the condition, size, location, and features (like number of bedrooms, bathrooms, garage spaces, etc.) of the property.

4. Market Value

This is the value the market is willing to pay for the property right now, based on the current supply and demand of like-properties. Market value may be higher or lower than appraised value for reasons such as:

  • Demand for homes is greater than the current supply of homes. This means there are more buyers than their are sellers, so buyers have to overpay to get a property.
  • A property needs to sell faster than market conditions. This limits the supply of buyers able to close quickly, in turn lowering what the market will pay.
  • Quick positive migration. This means there’s a big uptick in the number of buyers moving into an area within a short amount of time.

5. Loan-to-Value (LTV)

This is the percentage rate a lender will lend up to on a property. If a lender states they lend up to 80% LTV, then that means they’ll loan $80k for every $100k in appraised value.

Lenders will have different LTVs based on the type of loan they offer. Typically, cash-out loans and borrowers with low credit scores will get the lowest LTV options.

What Else Do Real Estate Investors Need to Know?

Looking for what value-add properties are? We have a blog on that here.

For more real estate investing resources:

Get connected and accelerate your cash flow. Happy Investing.

What Is a Value-Add Property?

In real estate investing, we are focused on one type of property: value-add.

Value-add is the practice of taking a property and increasing its market value – but how? By:

  1. Updating it
  2. Increasing the income from it
  3. Changing the use of it

Typically, you will increase the value by more than what you put into it, thus creating a profit for you.

“Value-add” is the opposite of buying a property that is “at retail” or “turn-key.”

What Does a Value-Add Project Look Like?

Here are a few examples of value-add investments:

  1. A fix and flip investor purchases a run-down house. They complete a rehab to add value and realize a gain or profit from the sell.
  2. A real estate investor buys a small house in a neighborhood with larger homes around it. They add square footage to the property to bring it up to the local market. Selling or renting this now larger property creates profits for the real estate investor.
  3. A land developer takes a large tract of land and subdivides it into smaller home sites. The smaller lot sales will be bigger than just selling one large lot.
  4. A real estate investor buys an 8-plex that is currently only at a fraction of the market rents. They increase the rent, creating both more cash flow and a higher valuation of the property.

As you can see by these examples, in the world of value-add properties, you create profit and cash flow.

How to Learn Real Estate Investing

For more real estate investing resources:

Get connected and accelerate your cash flow. Happy Investing.

How Much Does Hard Money Cost?

How much does hard money cost? Are these loans expensive?

Is hard money expensive? The quick answer is no, when used correctly.

Hard money loans are actually cheap when used in transactions that fit what they’re intended for.

Pros of Hard Money

Hard money loans are helpful in a few ways:

  • Using hard money is cheaper than taking on a partner.
  • Hard money lenders focus on real estate investors, unlike most banks.
  • It’s easy to qualify for.

Getting a hard money loan is much quicker than the process for a bank loan. In the real estate investment community, closing quick will: 1) get you the deal first, and 2) often get it at a better price.

When investors add up the savings they can get by closing fast with hard money loans, it’s clear this form of financing is a bargain. Missing out on deals and discounts can be the end of your lucrative real estate investing business.

When NOT to Use Hard Money

That being said, hard money does not belong everywhere. Used wrong, it can cost you big time. Here are some things to keep in mind:

  • It does NOT replace a bank loan.
  • If you have 30 to 60+ days to close and have a bank that works well with investors, you should be using a bank over hard money.
  • If you don’t expect to sell or refinance ASAP, a hard money loan probably isn’t right for you.

When hard money loans are used on the right deals for the right borrower, they put more money in your pocket. To increase your speed of investing and increase your cash flow hard money is one of the best tools.

At the end of the day, is it not your goal as a real estate investor to put more money in your pocket?

How Much Does Hard Money Cost?

How much do hard money rates cost? Typical hard money across the country runs from between 8% to 14%. Your actual rate will depend on your loan-to-value and your specific lender’s points and policies.

People see that these rates are higher than bank loans, and they assume it’s a scam. You have to remember that the flexibility, speed, and ease of hard money loans used right helps them pay for themselves.

How to Get a Hard Money Loan

Hard Money Mike has been assisting real estate investors for over 20 years. What form of financing are you looking for?

Contact us for hard money, traditional lending, and setting up bank lines of credit. Email us any questions at Info@HardMoneyMike.com.

Lastly, for more real estate investing resources:

Get connected and accelerate your cash flow. Happy Investing.

5 Paths to Financing Your Loan

Did you know you have more than one option when it comes to financing your property investments?

Investor Loan Chart

As you can see, there are 5 paths to take with financing your properties:

  1. Standard/Traditional
  2. Non-Standard
  3. Local Banks
  4. EZ Loan
  5. Limited Credit or Experience Loans (also known as Non-QM)

So, which loan type is best for your project so you can boost your cash flow and reach your goals faster? Find out here on our sister site, Investor Real Estate Loans.

What’s Your 2-Year Plan?

Close your eyes. Clear your mind. Take a deep breath.

Now, let’s pretend we’re talking to each other two years from now. What happened during that time period that made you proud and put a smile on your face? How does your cash flow look? What kind of work schedule do you have? How does life look for you and your family?

When it comes to investing, we have discovered that thinking ahead two years leads to the most success. Why two years? Well, it’s short enough to imagine without being overwhelming, and it’s long enough to create tangible, positive change in your life.

Coming up with a plan is as easy as one, two, three:

Step 1: Imagine where you want to be in two years.

Step 2: Evaluate where you’re starting at today.

Step 3: Create a plan that connects your current reality to your future dreams.

How do you formulate an actual plan? Well, that’s what our team is here to help you do. It’s just a matter of picking up the phone and giving us a call to chat.

One conversation can change your future…and your life!

What is hard money?

Funding Your Flip: What Is Hard Money?

What is hard money?

What is hard money, and how do you use it in real estate investing?

Hard money is the main type of financing for fix and flips and discounted rental property purchases (aka, value-add properties).

While conventional loans are based mainly on the borrower (credit, experience, etc.), hard money loans are based mainly on the property (loan-to-value and after-repair value, or LTV and ARV).  These loans are typically secured by a 1st lien on the piece of real estate being flipped or rented.

Other Names for Hard Money Loans

If you hear someone use one of these terms, then they’re probably referring to hard money:

The Top 3 Benefits of Using Hard Money

  1. FAST closings. Real estate investors who close fast can bid more aggressively on the value-add properties they desire compared to those who use traditional closing timeframes (30+ days). Additionally, faster closings with fewer hurdles means sellers are more likely to give a discount on their property.
  2. Up to 100% financing. This gives real estate investors the ability to spread their cash out and purchase more discounted properties.
  3. Ability to buy properties as-is. Most traditional lenders do NOT like properties that aren’t move-in ready. Hard money loans, on the other hand, are custom-built for fixer-uppers.

Hard money loans are designed for real estate investors who focus on value-add properties… so they can cash flow!

How to Get Real Estate Investor Loans

Hard Money Mike has been assisting real estate investors for over 20 years. What form of financing are you looking for?

Contact us for hard money, traditional lending, and setting up bank lines of credit. Email us any questions at Info@HardMoneyMike.com.

Lastly, for more real estate investing resources:

Get connected and accelerate your cash flow. Happy Investing.


A less than perfect credit score is eating away at your profit

What is your credit score costing you?

How much money might a lackluster credit score be costing you over the life of your investment business?

The impact of your credit score

You probably hear a lot of talk in the mortgage industry about your credit score and the effect it can have on your interest rates, but do you really have an idea of how much it’s affecting your bottom dollar?

Do you know how to determine your Return on Credit (ROC)?

Can you crunch the numbers to figure out how much your score is helping your cash-flow? How about how much money it’s sucking out every month?)

These calculations can get complicated, but the takeaway here is that a less-than-stellar score can really be costing your tens of thousands of dollars over the lifetime of your loan. And when your loan is on investment property, (or several,) you may as well be lighting your profits on fire.

We want to help! Contact our team so we can help you see where you’re currently at, and where you could be going instead.

Let’s get you to your goals faster by trimming some of the fat from your financing!

Hard Money Mike is a lender based in Colorado offering services in several states. We lend money for all varieties of commercial-based properties. So whether you’re trying to finance a fix-and-flip, vacant land, whole-tailing, or looking for a builder bridge loan, we’ve got you covered.

Call Mike Bonn at: 303-539-3000 or email Mike@HardMoneyMike.com

How Hard Money Mike Does Business: FAST!

Hard Money Mike does business differently than most others in the industry. Our #1 goal is to HELP YOU.

Truly. It’s as simple as that.

We want to BOOST your cashflow, find the very best products for your specific projects, and place you in a solid financial position.

We also strive to move at the speed of light.

What does that mean, exactly? Well, it means we can close most deals in DAYS, not weeks. Our team works efficiently and effectively to dot all I’s and cross all T’s to ensure you sign the dotted line as soon as possible.

No more sweating bullets as you wait weeks (or even months) to close a deal. With us, you can often close within a week!

Quick to Buy, Quick to Refi – A New Rental Investment Strategy

Quick to Buy, Quick to Refi, a new 2-step loan strategy, helps you maximize your loan amounts while limiting the amount of cash you put into a project. It also helps you rapidly finish your projects and buy again, and again, and again.

What does that all mean? It means you no longer need to worry about missing out on great deals and getting stuck in expensive hard money loans.

The Quick to Buy, Quick to Refi strategy all starts with properly setting up your short AND long-term loans.

Now, even though your short-term loan will come first (to quickly buy an under market property from a wholesaler), a key step is to FIRST get pre-qualified for the long-term loan. Why? To ensure you’re able to maximize both loan amounts. If you can qualify for a larger loan upfront, then it’s likely your short-term lender will match that amount.

It also means you’re already going through the process for securing a long-term loan as you begin renovating a property with a short-term loan. Think, “Two birds, one stone.” By the time you finish renovations, you’re ready to refinance into a long-term loan.

But, hold on. You also need to know about the types of refinances. There are two you need to know about: “rate and term” and “cash out”. And yes, it matters you know the differences.

Ready to find out what about those differences? Then check out the whole video here and start capturing free equity, boosting your cash flow, and investing in more properties.

Want more videos with more tips to maximize your cash flow? Then check out our new video page, or subscribe to our new YouTube channel! Be sure to also check out all of our invest tools.