It seems as though everyone is flocking to Miami to invest in real estate. If you want to get in on the action and build your portfolio in one of the nation’s hottest real estate markets, you should consider using a bridge loan to make it happen.

Some real estate investments and prospective property purchases might have very tight timelines. In certain cases, you may not have enough time to wait for a traditional loan to go through or be approved before you need to lock down a stellar deal.

That’s where bridge loans can help. Today, let’s break down bridge loans in Miami and explore when and why you should use them for your residential real estate investments.

What Is a Bridge Loan?

A bridge loan serves as a short-term financial tool aimed at bridging the gap between closing on a property and securing permanent financing. Typically structured with one to three year terms, during which the borrower pays only the accrued interest, bridge loans are frequently utilized by real estate investors. These investors leverage bridge loans to swiftly capitalize on promising investment opportunities while maintaining their liquidity until long-term financing can be secured.

They differ from other loan options like hard money loans in that hard money loan approvals are focused solely on the collateral. Whereas a bridge lender will factor in the financial strength and experience of the sponsor, alongside the quality of the asset. 

What Are the Key Points of a Bridge Loan?

Bridge financing is characterized by a variety of key points and attributes; let’s take a closer look.

Close as Quickly as Cash

For starters, bridge loans close incredibly quickly — since they require very little documentation compared to traditional mortgage loans, you can effectively compete with cash offers through bridge loan instruments.

Thus, they are a good way to leverage your debt and real estate investment assets without having to compromise on speed. These are deal-closing instruments, plain and simple. 

Interest Only Monthly Payments

Most bridge loans offer interest-only payments. This means your monthly payment will only cover the interest accrued on the loan, and the principal balance will be due at the end of the loan in the form of a balloon payment.

For many real estate investors, a short-term interest-only loan allows them to keep their expenses low whilst they secure long term financing or work on improving the asset to sell at a profit.

By making interest-only payments, investors can maintain cash flow flexibility, directing funds towards other investment opportunities or property enhancements. This strategy aligns well with investors' goals of maximizing returns and leveraging assets effectively within their investment portfolios

Short Term Solution

Bridge loans serve as short-term financing solutions designed for commercial use, particularly for non-owner occupied assets such as investment properties. It's crucial to understand that bridge loans should not be relied upon as the sole mortgage instrument for long-term investments due to their typically higher-than-average interest rates and potential additional conditions.

To effectively utilize bridge loans, a solid exit plan must be in place, outlining how the loan will be repaid within the designated short-term period, typically ranging from one to three years or 12 to 36 months. Fortunately, there are various strategies to achieve this, including refinancing existing loans, selling assets, or utilizing other financial sources.

For instance, imagine you're acquiring an investment property. If you plan to leverage the equity from another property for the down payment, a bridge loan can facilitate the acquisition process. Upon completing the property purchase and subsequently selling another asset, you can redirect the proceeds to repay the bridge loan, ensuring a smooth transition without impacting your long-term financial goals.

Why Use a Bridge Loan in Miami?

There are several reasons why real estate investors like yourself might use a bridge loan in the Miami real estate market.

Flexible Qualification Requirements

Bridge loans have comparatively flexible qualification requirements relative to normal loan instruments. Take a look:

Thanks to their streamlined and efficient process, bridge loans have gained significant popularity and effectiveness among various borrower demographics. They are particularly well-suited for:

  • Foreign nationals seeking investment opportunities in the Miami real estate market, providing them with accessible financing options tailored to international investors with no credit history in the U.S. or unverifiable income.
  • Non-warrantable condo buyers who may encounter challenges obtaining traditional financing due to the property's unconventional characteristics or HOA restrictions. This makes bridge loans a very popular options in Miami's luxury condo segment, especially for buyers of condotels and ultra-luxury units.  
  • Land investors or buyers involved in new construction projects and spec home developments, where the need for short-term financing to bridge gaps in funding is common during the development process.
  • Investors interested in acquiring high-value real estate properties, commonly referred to as jumbo loans, benefit from the flexibility and adaptability of bridge loans to meet their specific investment goals and purchase expensive properties seamlessly. Many traditional banks offer jumbo loans but are capped when it comes to loan amount. However a bridge lender typically has no max loan amount and have the capacity to close on $10MM+ investment purchases. 

    Overall, bridge loans offer a versatile solution for diverse borrowing needs within the real estate market, providing swift access to capital and facilitating smooth transactions for a wide range of borrowers.

Efficient Closing Timelines

Bridge loans further allow very efficient closing timelines. In the competitive Miami market with lots of cash buyers, bridge loans allow you to close as quickly as a cash offer, with funding in as little as a few days. 

Note that they're also highly effective and profitable loan instruments for pre-construction condominium buyers who need to come up with 50% of the purchase price at closing. With a bridge loan, you can leverage your debt to complete the purchase and remain liquid.

Flexible Uses

Bridge loans are highly flexible instruments, as detailed above. They can also be useful in situations like:

  • When you need super jumbo financing of over $2 million
  • When you want to acquire a new property quickly while waiting for an existing property to sell
  • When you have contractual obligations that require you to close the deal fast
  • When you want to purchase land and are waiting for approval for a construction loan
  • When you are buying a new construction condo or condotel that may not be approved by Fannie Mae or Freddie Mac
  • When you can’t qualify for a conventional loan because you are a foreign national, don’t have a credit history, or don’t have verifiable income

Bridge Loan Use Cases

Not all bridge loan lenders cater to all asset types in the real estate market. The quality of the property you want to buy, the property type, and the projected cash flow of your asset is the most crucial factor impacting whether or not a lender will underwrite your loan.

Still, there are lots of bridge loan program use cases you might find as you experiment with these instruments.

1. Residential Properties

Of course, you can use bridge loans for residential properties. However, there are some caveats:

  • The residential property has to be a non-owner-occupied property, this means a bridge loan cannot be used to purchase a primary residence or second home. 
  • A bridge loan can be used for premier luxury assets, like properties worth over $3 million.
  • You can use a bridge loan to purchase a pre-construction or new construction condo that isn’t Fannie Mae approved and, thus, doesn’t yet qualify for traditional financing.

2. Commercial Properties

Bridge loans can also be used to purchase or invest in commercial properties, like an office building, multifamily or retail storefronts. Of course, your financial strength and experience in commercial real estate will heavily dictate whether or not a lender approves a bridge loan for your needs (alongside other attributes like projected cash flow and the value of the asset).

3. Land for Development

Many South Florida real estate investors and developers use bridge loans to purchase land. You can use it to buy land to build single-family homes, multi-family homes, commercial properties, and more.

But as with commercial loans, your experience in this arena and your track record of successfully buying and developing land is key to getting approved for the loan you want.

In addition, don’t forget that a bridge loan is not a construction loan. You can use a bridge loan to purchase the land or tap into the equity of the land to make improvements until a construction loan is secured. 

5 Examples of Bridge Loans in Miami's Luxury Real Estate Market 

In Miami, bridge loans have become exceedingly popular, and at Vaster, we specialize in connecting developers and investors with the perfect bridge loans tailored to their needs. Here are several illustrative examples of bridge loans we've facilitated, all for investment properties:

  • $13.2 million bridge loan for the purchase of a single-family home in Coral Gables, FL
  • $32.5 million bridge refinance for residential land in Indian Creek Village
  • $2.25 million cash-out refinance for a luxury condo in Miami Beach
  • $2.9 million cash-out refinance for a single family home in Pinecrest, FL
  • $7.75 million refinance for a single-family home in Surfside, FL

These examples showcase the versatility of bridge loans in facilitating various investment transactions within the dynamic luxury real estate landscape of Miami.

Where To Get a Bridge Loan in Miami?

You can get bridge loans from a few different sources depending on your needs and your current options.

Traditional Lenders vs. Private Lenders

Traditional lenders may offer bridge loans to certain real estate developers and investors that they have strong banking relationships with. However, private lenders might be a better choice for several reasons. Private lenders:

  • Often have more flexible lending requirements, making them an ideal option if you don’t qualify for conventional loans due to credit history or other factors.
  • Can typically close loan deals more quickly than traditional lenders, providing a faster turnaround time for securing financing. This agility is particularly advantageous in competitive real estate markets where swift action can make all the difference.

Furthermore, private lenders often offer personalized service and a deeper understanding of local real estate dynamics, allowing them to tailor loan packages to meet the unique needs of individual borrowers. As a result, many developers and investors prefer the speed, flexibility, and personalized approach offered by private lenders when seeking bridge financing solutions.

How To Get a Bridge Loan in Miami?

If you settle on a bridge loan, you need to know how to get it without falling into any traps or paying too much money. Here’s what you should keep in mind.

Step 1: Research Local Lenders With Expertise in Your Market

First, always be sure to research local lenders in your area. It’s best to find a lender with expertise in your market, as they’ll be able to underwrite a loan that’s perfect for the unique market conditions and costs associated with your upcoming purchase.

Step 2: Sign Purchase Agreement

Once you find the right lender, you’ll want to sign the purchase agreement after checking it over with your lawyer. Remember, bridge loans move very quickly, and you’ll need to be under contract for a property for your bridge loan to be approved (as opposed to a conventional loan, where you can get preapproval for your loan before you start looking for properties).

Step 3: Submit Your Application

Submit your application for your loan to your lender of choice. As with many other aspects of bridge loans, this process is more streamlined compared to a standard 1003 application.

Step 4: Submit Documentation

Don’t forget to submit documentation required to prove your identity, like sponsor IDs, corporate documents for the LLC that will hold the property title, your latest bank statement, etc.

Step 5: Schedule Closing

If all goes smoothly, you can schedule the closing for the property purchase and continue on your way!

Miami Bridge Loans With Vaster

Ultimately, the best way for borrowers to get the ideal bridge loan for their real estate investment needs is to partner with a lender they can trust. At Vaster, we are dedicated to understanding our clients unique needs, empowering them to make informed decisions towards their purchase or investment.

Our “lend to earn” philosophy ensures that our client’s success is our success, and we prioritize building long-term relationships with both our clients and partners.  Our experienced, knowledgeable loan officers specialize in the South Florida real estate market, and offer a custom loan solution to fit your needs. Contact us today to learn more.


What Is a Bridge Loan and How Does It Work, With Example | Investopedia

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