<br>
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</div>
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<br>

## What is a Bridge Loan?

<br>

A bridge loan is a loan used to purchase an asset such as real estate for a short period of time. In real estate, the bridge loan bridges the period of time between purchase and sale (i.e. flipping a house for a profit) or purchase and refinance (i.e. rental property investing).

<br>

## Hard Money vs Private Lender

<br>

<div style="width:100%;"><iframe width="100%" height="315" src="https://www.youtube.com/embed/gwy0CPRd5tM" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture" allowfullscreen></iframe></div>

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<br>

The term hard money is often associated with lenders who charge excessively high interest rates. The fact is that hard money simply means a loan that is backed by a hard asset. There is no difference between hard money and private money, as someone who calls themselves a hard money lender offers effectively the same financing programs as someone who calls themselves a private lender. The market determines the interest rates, borrowers are free to compare terms and select the most attractive terms. This is why borrower education is so important. For more education, read [The Ultimate Guide: Real Estate Private Lenders](https://www.offermarket.us/blog/real-estate-private-lenders).

<br>

In summary: hard money lenders and private lenders are one in the same. Both provide private loans backed by hard assets such as real estate.

<br>

As a matter of public relations, in an effort to shed the connotation of unfair interest rates and predatory business practices, many executives in the private lending industry are championing a discontinuance of terminology including "hard money", "hard money loan", "hard money lender" in favor of the terms "private money", "private loan", "bridge loan", "fix and flip loan", "private lender".

<br>

## Fix and Flip Loans

<br>

Bridge Loans are commonly referred to as "Fix and Flip" loans or "Hard Money" loans. As stated above, these are all the same concept. They're short term loans used by real estate investors to purchase and rehab investment properties. We do not prefer the term "fix and flip" because it is not just fix and flip investors who use this important form of financing. Rental investors use these loans as part of the BRRR strategy of buying, rehabbing, renting and refinancing a property in an effort to 

<br>

## Bridge Loan Interest Rates

<br>

With terms typically just 3 to 18 months depending on the scope of work to renovate a property, interest rates for bridge loans are based on the 6 month treasury yield and the 2 year treasury yield which are charted below. 

<br>

Private lenders typically price bridge loans at the 6 month or 2 year treasury + 5% risk premium. Some lenders price higher than a 5% risk premium based on borrower experience or because they want to maximize returns perhaps due to limited capital or limited competition in their market.

<br>

## 6 Month Treasury Yield

<br>

<iframe src="https://fred.stlouisfed.org/graph/graph-landing.php?g=M9PS&width=670&height=475" scrolling="no" frameborder="0" style="overflow:hidden; width:670px; height:525px;" allowTransparency="true" loading="lazy"></iframe>

<br>
<br>

## 2 Year Treasury Yield

<br>

<iframe src="https://fred.stlouisfed.org/graph/graph-landing.php?g=M9PN&width=670&height=475" scrolling="no" frameborder="0" style="overflow:hidden; width:670px; height:525px;" allowTransparency="true" loading="lazy"></iframe>

<br>
<br>

## Bridge Loan Terms (Single Family)

<br>

<div style="display: grid; grid-template-columns: repeat(1, minmax(0, 1fr)); overflow: auto; white-space: nowrap;">
<table>
<thead>
  <tr>
    <th>Guidelines:</th>
    <th>Single Family Bridge Loans</th>
  </tr>
</thead>
<tbody>
  <tr>
    <td>Interest Rates</td>
    <td>2 year Treasury + 5%</td>
  </tr>
  <tr>
    <td>Origination Fees</td>
    <td>1 to 2 points (% of loan amount)</td>
  </tr>
  <tr>
    <td>Property Types</td>
    <td>Single family (1 - 4 units), townhomes, PUD, warrantable condos</td>
  </tr>
  <tr>
    <td>Loan Amounts</td>
    <td>$50,000 - $25,000,000</td>
  </tr>
  <tr>
    <td>Maximum LTV, ARV</td>
    <td>75%</td>
  </tr>
  <tr>
    <td>Maximum Loan To Cost</td>
    <td>90% of purchase and 100% of rehab</td>
  </tr>
  <tr>
    <td>Term Length</td>
    <td>up to 18 months</td>
  </tr>
  <tr>
    <td>Minimum Guarantor FICO</td>
    <td>620</td>
  </tr>
<tr>
    <td>Ownership</td>
    <td>LLC or Corporation</td>
  </tr>
  <tr>
    <td>Recourse</td>
    <td>Full recourse</td>
  </tr>
</tbody>
</table>
</div>

<br>

## Bridge Loan Terms (Multifamily)

<br>

<div style="display: grid; grid-template-columns: repeat(1, minmax(0, 1fr)); overflow: auto; white-space: nowrap;">
<table>
<thead>
  <tr>
    <th>Guidelines:</th>
    <th>Multifamily Bridge Loan</th>
  </tr>
</thead>
<tbody>
  <tr>
    <td>Interest Rates</td>
    <td>2 year Treasury + 5%</td>
  </tr>
  <tr>
    <td>Origination Fees</td>
    <td>1 to 2 points (% of loan amount)</td>
  </tr>
  <tr>
    <td>Property Types</td>
    <td>5-20 unit properties</td>
  </tr>
  <tr>
    <td>Loan Amounts</td>
    <td>$500,000 - $25,000,000</td>
  </tr>
  <tr>
    <td>Maximum LTV, ARV</td>
    <td>75%</td>
  </tr>
  <tr>
    <td>Maximum Loan To Cost</td>
    <td>Purchase: 80% of As-Is Value and 100% of rehab, Refinance: 75% of As-Is Value and 100% of rehab</td>
  </tr>
  <tr>
    <td>Term Length</td>
    <td>up to 24 months, with 6-month extensions</td>
  </tr>
  <tr>
    <td>Minimum Guarantor FICO</td>
    <td>680</td>
  </tr>
<tr>
    <td>Ownership</td>
    <td>LLC or Corporation</td>
  </tr>
  <tr>
    <td>Recourse</td>
    <td>Full recourse, Limited recourse</td>
  </tr>
</tbody>
</table>
</div>

<br>

## Private Lender Information

<br>

- Directory: [Hard Money Lenders In Maryland](https://www.offermarket.us/blog/hard-money-lenders-in-maryland)
- [DSCR Loans](https://www.offermarket.us/blog/dscr-loan-program)
- [Rising Interest Rates](https://www.offermarket.us/blog/rising-interest-rates)
- [OfferMarket Capital: Low Cost Private Lender for Bridge Loans & DSCR Loans](https://www.offermarket.us/capital)
- [Get Quotes for DSCR Loans, Bridge Loans](https://www.offermarket.us/loans)

We call them bridge loans but you may know them as hard money or fix and flip loans. Same thing, different wording, let's learn everything there is to know about them!

Bridge Loans aka Hard Money aka Fix and Flip Loans

large_Bridge Loans aka Hard Money aka Fix and Flip.png

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Bridge Loans aka Hard Money aka Fix and Flip Loans.png

Bridge Loans: Fix and Flip, Hard Money | OfferMarket

Bridge Loans: Fix and Flip, Hard Money

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## What is Offerpad?

Offerpad is a platform that specialized in iBuying. iBuying is a new emerging business where a home seller can receive a quick quote on their home. Initial offer price comes in within 24 hours.  Offerpad's quotes are often at a discount to prevailing market rates. Homeowners don't have to make costly repairs to their home to get an offer. Part of the appeal is that there are no real estate agents commissions. The whole process is quick with closing date coming within a week. This is in contrast to standard 30 to 45 days with traditional sales. Since Offerpad is the sole buyer, there are no negotiations. Owner won't have to host any open houses since Offerpad is the sole buyer. Offerpad will conduct their own home inspection. Offerpad, provides offers below open market prices and does not let owners negotiate. However, Offerpad is open to a second review if the owner believes that some detail was missed. 

<br>

While the closing might be quick, the final sale price might be below current market prices. This is due to missing out on competition created by an open market. When many retail buyers go to an open house and compete for the property, it tends to result in higher prices. While this process is tedious and requires more work, it results in higher sales price. When many people compete for the same property the home owner benefits. OfferMarket creates competition by having an open and free real estate marketplace. Having an open and free marketplace attract many sellers and buyers. 

<br>

iBuyers and Offerpad do not charge commissions, but they do charge a service fee. This service fee can be as high as 10% of the value of the home. Sometime the final service fee is not finalized until last moment when home owner about to sign. This is not the best business practice. There have been reports that the 1% contract cancellation fee is not disclosed up front. This tactics locks in owners if they change their mind after they sign initial documents. 

<br>

Selling to Offerpad can be convenient and quick, but the price might be way too steep. Make sure to get a second opinion on your home valuation before proceeding to sign anything so you are aware of the potential valuation ranges for your property. Its important to understand if your goal is to get top dollar for the property or to sell it quickly without minding a steep discount to the market value. 

<br>

## Offerpad doesn't operate nationwide

As of Summer 2021, Offerpad only operated in 19 markets, mostly in Souther United States:

<br>

- Phoenix, AZ

- Tucson, AZ

- Jacksonville, FL

- Orlando, FL

- Tampa, FL

- North Carolina, FL

- Charlotte, FL

- Raleigh, FL

- Austin, TX

- Dallas-Fort Worth, TX

- Houston, TX

- San Antonio, TX

- Las Vegas, NV

- Charlotte, SC

- Atlanta, GA

- Birmingham, AL

- Denver, CO

- Indianapolis, IN

- Nashville, TN

<br> 

## Offerpad is selective in what homes it buys

<br> 


Offerpad has strict buying criteria to which it adheres in all buying decisions. The property must be a single family home. It must be build after 1960. Land lot on which the home is situated must be smaller than one acre. Value of the home must not exceed $600,000 in most markets. The home absolutely must not be outside their service area. They are not interested in purchasing mobile homes or homes that were pre-fabricated or manufactured. Offerpad also doesn't make offers on homes that are suspected of having any types of foundation damage.

## There are other options out there:

<br>

- OfferMarket

- Opendoor

- Zillow Offers (shut down November 2021)

- RedfinNow

<br>

| Service    | Type    | Offer Competitiveness |
| ------------- | ----------- | -------------------------- |
| Offerpad   | iBuyer   | Low          |
| Opendoor   | iBuyer   | Low          |
| Zillow Offers | iBuyer   | Low          |
| RedfinNow   | iBuyer   | Low          |
| OfferMarket  | Marketplace | High         |

<br>

## Instant offers

<br>

Offerpad is an "iBuyer" (short for "instant buyer") of single family homes. iBuying is a new home sales model where you receive a cash offer to sell your home fast and to avoid agent commissions. While there is an incredible convenience factor in play, the iBuying model comes with some drawbacks that we feel are important to know. If you're looking to sell your home fast and looking for Offerpad competitors, this article aims to detail your options. Keep in mind all of these business are rated by better business bureau.

<br>

Offerpad provides some benefits to its customers. They have a trade-in program. A local moving services at a 50-mile radius. They provide flexibility in moving times, giving owners up to 3 extra days to move.

<br>

## Things to know about the iBuyer model

<br>

- Service is available in limited markets

- Not all houses receive an offer

- You will receive a lower offer than you would in a competitive sale.

- You will pay service fees of 6% - 10% (not including repairs)

- Your offer will be contingent on an inspection and you will either need to pay for repairs or accept a revised, lower offer.

<br>


<br>

## Additional considerations:

<br>

​- Offerpad’s services are limited to certain cities in Alabama, Arizona, Florida, Georgia, Nevada, North Carolina, South Carolina and Texas.

- Service is limited to houses that cost less than $600,000 and have no structural problems

- Offerpad can perform required repairs and deduct the cost from the final offer. Offerpad customers have expressed that Offerpad overcharges for repairs.​

<br>

## Offerpad vs OfferMarket

<br>

| Comparison    | OfferMarket    | Offerpad  |
| ------------------- | ------------------- | --------------- |
| Service fee    | 0%      | 6% - 10% |
| Repairs      | $0 (as is)  | Paid by Seller |
| House type | Any | Selective |
| Closing timeframe | 15 - 45 days | 8 - 30 days |
| Markets | Nationwide  | Limited cities in AL, AZ, FL, GA, NV, NC, SC, TX |

<br>

## At the end of the day, how much money do you receive?

<br>

| Net Proceed Analysis   | OfferMarket | Offerpad |
| -------------------------------- | -------------- | ---------------- |
| Purchase price | $100,000  | $100,000 |
| Service fee | $0 | $7,000* |
| Repairs | $0 | $2,000* |
| Closing costs (transfer tax, recordation) | $1,500   | $1,500* |
| Net proceeds | $98,500   | $89,500 |

<br>

(*) *estimated*

<br>

Listing your home with OfferMarket is easy, quick and free. Test the market and see if buyers or investors will start competing over your home. Remember, the best way to get them interested and competing is to list for a low price. They will immediately jump onto a deal. This doesn't mean that you have to sell for that price. You can wait until more offers come and ask them to provide a more competitive offer since you have so many. This is what makes buying and selling with OfferMarket so easy.

## [Ready to sell your house <u>fast</u> and <u>competitively</u> with OfferMarket?](https://www.offermarket.us/sell?ref=blog-offerpad-competitors)

<br>

### Additional iBuyer comparisons:

<br>

- [Opendoor Competitors](https://www.offermarket.us/blog/opendoor-competitors)

- [RedfinNow Competitors](https://www.offermarket.us/blog/redfinnow-competitors)

- [Zillow Offers Competitors](https://www.offermarket.us/blog/zillow-offers-competitors)

<br>

Offerpad competitors include OfferMarket, Opendoor, Zillow Offers and RedfinNow. Learn how these services compare.

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Offerpad Competitors - OfferMarket

Offerpad Competitors

Grow your real estate investing business with the most competitive DSCR loan product. OfferMarket also provides DSCR rental loans, bridge loans, hard money, fix & flip, rehab, ground up construction loans.

Rental Loans

Real Estate Valuation for Sellers

Real Estate Valuation for Buyers

<br>

## Real Estate Valuation for Sellers

If you're wondering "what's my house worth?" or "how much can I sell my house for?", we are here to help.

<br>

## Real Estate Valuation for Buyers

If you want to buy a house buy you aren't sure how much it's worth, we are happy to provide you with a free real estate valuation estimate.

<br>


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