There are many opportunities in the property market where investors can make a good profit helped by bridging finance.
Houses in multiple occupancy (HMOs) are ones where a number of bedrooms are rented with shared facilities such as kitchens, lounges and bathrooms. Popular with students and young professionals, the rents received from an HMO can be higher than renting the house to one household. There can be extra costs in managing HMOs and there are safety and licensing regulations to comply with. A bridging loan can be used to finance the conversion of a house for multiple occupancy.
Developing new houses or refurbishing derelict property can be profitable, but requires some knowledge of construction. Many lenders will regard property development as risky, which makes obtaining a long-term loan for the development difficult. Bridging lenders can be more willing to lend funds to start the building project. After some building work has been done, the project will probably be seen as less risky, and refinancing to take on a long-term loan will be easier.
Another area where high profits can be made is through purchasing property at auctions where it is possible to buy at well below market prices. Full payment for auction property is usually required within 28 days after the auction, and a bridging loan can make sure that the funds are available before the purchase deadline.
Bridging loans are flexible short-term loans that can help property investors make money.