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Miami Beach, FL has 50 hard money bridge lenders in the city. Loan amounts average around $313,500. Rates for loans average 11.5%. The mean length offered for notes is 38 months. The mean origination fee applied to the loans is 2.4%. Lenders typically offer a 70% loan to value on loans in Miami Beach.
Michael takes a private money bridge loan from Prosper Investments in order to rehab a townhouse to resale in the Bayshore neighborhood of Miami Beach, FL. The list price of the property is $370,000. The lender agrees to write a note with a 85% loan to value (LTV) so they will loan $314,500 on the house. The parameters of the note also include a one percent origination fee that is to be paid at closing and a 12 month, interest only note with a 12% rate of interest.
In addition to paying the $3,145 origination fee, Michael will also fund $55,500 of the purchase with his own funds, or 15% of the purchase price. The lender will collect $3,145 in monthly interest payments from the borrower. This is calculated by taking the total loan value of $314,500, multiplying that by the 12% rate of interest, and then dividing that number by 12. If Michael sells the house for $499,500 after 12 months, he would realize a gross profit of $88,615 after subtracting the original principle of $314,500, the cash paid at the close of $55,500, the origination points of $3,145, and the total interest payments of $37,740. This gross profit doesn't include building costs.
Jack is a real estate investor in the North Shore neighborhood of Miami Beach, FL. He buys a run-down property for a rehab project and takes a private money bridge loan from Urban Finance Company with the following paramters:
a) A $200,000 sales price, b) a 55% loan-to-value (LTV), c) a 18 month term, d) a 9% interest rate, and e) a 4% origination fee.
Assuming a $260,000 sales price after the 18 month term, the numbers for the deal would look like this:
$260,000 sales price
- $110,000 loan principle (55% LTV)
- $90,000 cash paid at closing (45% on 55% LTV)
- $4,400 origination points (4% of the $110,000 principle)
- $14,850 total interest paid (18 months x 9% interest)
-----------------------
= $40,750 gross profit (does not include taxes or rehab costs)
Nation’s fastest and easiest private real estate lender - Funding Fix and Flip, Ground-Up Construction, and DSCR. Closing as fast as 5 business days!
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