Bridge financing consists of short-term loans that are provided to real estate investors and entrepreneurs. They are offered by private moneylenders after a valuable asset, like real estate property, is kept as collateral.
In recent years, the popularity of bridge financing solutions has increased quite significantly. Many business owners are using bridge loans to deal with revenue shortfalls caused by seasonal variations and other economic factors.
How Does Bridge Finance Benefit Investors?
Here are some of the ways in which bridge-financing packages help investors:
Bridge financing enables investors to make quick asset purchases while its price in the market is low. This enables the investors to earn a good profit by selling off the asset when its price increases in the market.
Bridge financing enables business people to make independent deals without partnering up with anyone. This gives them a greater degree of freedom to do what they want with the assets they acquire.
What Are The Bridge Financing Scams That Investors Need To Avoid?
Since the popularity of bridge loans is rapidly increasing, a few scammers have entered into the market to take advantage of unsuspecting borrowers. Loan scams can deprive you of your hard money if you are not carful.
The following are two commonly encountered bridge financing scams that investors need to avoid:
· The Processing Fee Scam
In this kind of bridge financing scam, the fraudsters demand that the loan applicants pay a significant processing fee for their applications. Once the borrower transfers the amount demanded by the scammers, they walk away and break off all contacts with the loan applicants.
Processing fee scams are usually conducted over the internet and borrowers rarely get to see the people they are dealing with. The advertisements for these scams are usually sent to the victims via email and not usually contain unbelievable claims and many grammatical mistakes.
· The Last Minute Change Scam
This scam is carried out by established lending agencies that make last minute changes to the terms of the loan agreement in order to increase their gains from the borrowers. Last minute change scams are hard to detect because they can also be carried out by companies that have been around for a long time.
The only way to identify these scams is by talking to people who have already been tricked by them. Experienced investors always research the track record of the lending agencies they intend to borrow from before applying for a loan.
Gregg Marcus is a commercial loan expert and has helped many investors make good investment choices. To learn more about private loans and what you can do with them, email Gregg at email@example.com