Patch of Land is a real estate lending platform that has offered short-term bridge financing and longer-term rental property loans for real estate investors. Platforms of this type serve an important segment of the investor lending market, providing capital for fix-and-flip, bridge, and rental property acquisitions outside of conventional and agency programs.
Types of Products Offered by Investor Lending Platforms
- ✦Fix-and-flip bridge loans: short-term financing (typically 6 to 24 months) for purchase and renovation of properties
- ✦Rental property loans: longer-term financing for stabilized single-family and small multifamily investment properties, often underwritten on DSCR
- ✦Bridge loans: short-term capital for investors who need to close quickly before arranging longer-term financing
- ✦Ground-up construction: financing for builders constructing new residential properties for sale
How Investor Lending Platforms Differ From Traditional Lenders
Investor lending platforms typically underwrite on asset value and income potential rather than borrower income verification. Approval speed is a primary value proposition: many can close in days rather than weeks. Rates are higher than conventional financing, reflecting the short-term nature and risk profile of the borrower and collateral. Origination fees (points) are standard. LTV limits are lower than conventional, typically 65% to 75% of after-repair value (ARV) for fix-and-flip and 70% to 80% for rental property products.
What MLOs Should Understand About This Segment
- ✦These products are not agency-eligible and are held on portfolio or sold to private investors
- ✦MLOs can refer investor clients to private lending platforms for bridge or fix-and-flip capital and then originate the long-term refinance once the property is stabilized
- ✦Terms and availability on investor lending platforms change based on private capital market conditions
- ✦Borrowers should request current term sheets and compare multiple platforms before committing
Transitioning From Bridge to Permanent Financing
- ✦After a fix-and-flip is stabilized and rented, a DSCR refinance replaces the short-term bridge
- ✦The property must be stabilized with a lease in place for most DSCR programs
- ✦Seasoning requirements vary: some DSCR lenders require 3 to 6 months of lease history before refinancing
- ✦The ARV appraisal from the bridge period may not substitute for a new appraisal on the DSCR refinance
Aria can help you structure the bridge-to-permanent financing path for an investor property and identify DSCR lenders appropriate for the exit refinance. Ask at vicariointel.com.
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