Opportunity is a window. Advantage is a door. That is a somewhat cryptic way of saying that the ability to take advantage of an opportunity requires access to the necessary resources quickly, when they are needed. Within the investment and real estate realms, that advantage is most commonly provided by private lenders, such as ReProp. Private lenders are dispersing the funds of private investors, making loans to borrowers who may not have the resources (like extensive credit history, excellent credit score, or well documented income) to acquire a traditional bank loan.

Even if the prospective borrower does have those bank loan qualifying characteristics, they may simply need the funds sooner than a bank can provide them. Because of regulations governing banks, the loan qualification and disbursement process can be lengthy and fall prey to subsequent misgivings by bank officers and/or inspectors.

Those regulations are in place to protect the funds of account holders who blindly trust the bank to invest their money and provide a modest, even minimal, return on investment without risk of loss. The bank operates a double-blind transaction paradigm. The borrower does not know the origin of their money, and the lenders (the account holders) do not know the destination or use of their funds.

In one of ReProp’s recent successes, our team initiated the loan to a gas station purchaser, not for the full price of the gas station, but to buy out an inheritance interest in the property/business. This allows a traditional bank loan to be subsequently completed for the balance required to purchase in full.

In the case of the gas station, revenue would begin to accrue to the borrower/purchaser as soon as they legally took title to the property/business. This process underwrites the urgency of hurdling that initial step of eliminating the inheritance interest.

In the case of another ReProp bridge loan, the path to the revenue stream was longer, but still very much contingent on the bridge loan. A developer had already invested in the acquisition of land for an 8-unit subdivision. Before that raw land could become marketable as home sites, it has to be prepared with the necessary ground-level infrastructure/excavation.

Our short-term, interest-only loan funded that preparation, and the borrower’s repayment could then be incrementally funded as each home site was subsequently sold and developed.

In almost all of our recent bridge loans of this nature, the short term has been 24 months or less, interest free, and the loan rate has been in the vicinity of 10%. That may not be the lowest rate available anywhere – compared with a long-term secured bank loan, for instance, but then again it might be if the borrower’s credit is less than impeccable. In any case, the availability of funds quickly and readily is, as they say, priceless. Providing the opportunity for buyers from underserved sectors to take advantage of the opportunities they encounter and choose to pursue is what makes our team here at ReProp essential in the expansion of the real estate investment market.