North Dakota Bridge Loans

Alex finds a duplex in Bismarck, ND to remodel and re-sell. Since he does not have enough cash on-hand to acquire the $260,000 house outright, he takes out a bridge loan from West Star Funding Corporation. The loan to value (LTV) on the note is 85%. This means Alex will need to bring 15% of the sales price to closing and the principle amount will be $221,000 on the note. The parameters of the loan dictate a 12% note for 6 months. They also stipulate a 2 point origination fee, that will also need to be paid when the property closes.

Accordingly, the borrower will be required to contribute a $39,000 down payment plus pay a $4,420 origination fee. West Star Funding Corporation will collect $2,210 in monthly interest from the borrower. This is calculated by taking the total loan amount of $221,000, multiplying by the 12% rate of interest, and then dividing that amount by 12. At the end of the loan, he sells the rehabed house for $312,000. After deducting the $13,260 in interest expenses ($2,210 times 6 months), the $4,420 origination fee, the $221,000 principle amount on the loan, and the $39,000 he brought to closing, he will make a total profit of $34,320 ($312,000 price minus $277,680 in costs). This profit would then be reduced by any rehab costs paid by the borrow.

Carlos finds a house in West Fargo, ND to renovate and sell. Since he does not have enough cash to buy the property outright, he takes a hard money bridge loan from West Shore Investment Corporation with the following parameters:

$180,000 sales price
85% loan-to-value (LTV)
6 month term
13% interest rate
5% origination fee

Based on a $234,000 sales price after the 6 month term, the numbers for this deal would look like the following:

$234,000 sales price
- $153,000 principle on note (85% LTV)
- $27,000 cash paid at closing (15% on 85% LTV)
- $7,650 origination points (5% of the $153,000 principle amount)
- $9,945 interest payments (6 months x 13% interest)
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= $36,405 gross profit (does not include taxes or rehab costs)