Ep 75 - How We Did Our Very First Bridge Loan

Hey, everybody. Flip and Danny here, founders of the Freedom Real Estate Group family of companies. And welcome to another episode of our podcast.

And our podcast is called Freedom through Passive Income.

That's right. And today's episode is called how we did our Very first First bridge loan. So cute.

I feel like there's so many. When we do our first, I'm like, oh, another first.

Yep, this was the very first one. And it just happened very recently, actually. Yeah. And so. And we just made. We made a little bit over $3,000 in under 30 days. And you know, there was going to be people out there. $3,000 in under 30 days. So what? We really didn't do much.

Yes.

You know, so that's, that's a lot of money for not doing much.

Yeah.

At all. Yeah. And so. So, Danny, what a br.

Thanks, Flynn. So a bridge loan is short term financing. It's the easiest way to explain it. You're going to see gap financing, interim financing, essentially. A bridge loan was originally described as if Flip and I wanted to sell our house and we're getting. We're actually moving to Florida. So when we sell our house and move to Florida to buy our next house, if we weren't able to make that transaction happen, a bridge loan could be used for us to get from point A to point B, essentially. So that's.

You can buy one house and then sell the.

Yeah, exactly.

Instead of trying to do them all on the same day.

That's insane.

Oh, yes, it is. So that's what a bridge loan is. I just say short term financing. Easy, easy to explain because this one is a little bit different than, you know, what people would typically think of as a bridge loan.

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Here's the story and why we're doing this podcast. I was on the phone the other day with an investor who invested in one of our syndications and he said, hey, Danny, I would just love to. To talk to you real quick and just ask about your business and how you got into it and how some of the backend details works. And so I said, absolutely. I'm happy to. Although I will tell you that our podcast is doing just that. We're telling you everything that we do and we're describing it. And it's over 365 days. We plan to cover every topic imaginable.

Wait, wait. Over 365 days or it's over.

It's over 365 days.

Yeah. Not meaning more than 365 days. Just being clear.

It's on the record now because we're recording. Okay. Just being clear. So I did. We talked about many different things that he had questions about, or he would just say, what else do you want to share with me? And I would just. It was very overwhelming. If I was him on the other side of the phone, I'd have been like, what? I don't even understand half the things you're even saying right now.

Drinking from the fire hose.

And I tend to talk fast, so I'm trying to do better. Especially in these videos, I'm like, danny, sometimes you can't even understand you because you're just blurting it out so fast that you can't. I'm just slurring the words together. And I'm not drunk. It's just the way I roll. Anyway, so it was an overwhelming fire hose type conversation. So I thought, hey, let's talk about this. Because it just happened. And that's sometimes how we pick topics.

That's right.

So he was asking about our debt fund because he was considering having his mom actually invest in our debt funds. He really wanted to understand how it worked. He goes, okay, so it's different from private lending because I'm gonna put my money in or my mom's money in, and it's gonna earn interest from day one. Whereas a private money loan, I have to wait for you to have a deal, and then you submit it to me, I look over the packet, and then I send the money to the title company. And I said, yes, you nailed the differences. Perf. He said, so how are you affording to be paying me interest if it's not secured by a property? And I said, that's funny you asked, because we just did our very first bridge loan, and this is one of the ways that we're doing that. So the debt fund is great for us because it allows us to have a bucket full of money that is ready at a moment's notice, because when you find a deal, you want to be able to grab that deal. And sometimes that means closing super fast. So that's why we created it. And it's just ease in terms of the transaction time for our investors and for our transaction coordinator. But he's right. If we're paying interest on funds that are sitting there, well, you know, how do we do that? And so I explained a couple things on how the inner workings happen within our business. So what we did is Freedom Capital Investments is in charge and managing the debt fund. And so Freedom Real Estate Group is the one who's buying these turnkey properties. So Freedom Capital Investments will loan money to Freedom Real estate group at 12% in order to buy their properties. And then yet we're paying our investors 6, 8 and 10%. So we've got a little bit of a cushion there. Right. So that we can afford to be paying interest on this money non stop.

Right.

Then this is the twist. Why we did our first bridge loan if we know we've got a period of 30 days where we've got quite a bit of money in the debt fund waiting for the pipeline of purchases to come through. We still need the money, but it's sitting there and we're paying interest on it. So why not do something like this? A friend of ours says, hey, I need a temporary loan. I'm getting ready to refinance my house, but the hard money loan needs to get paid off on Friday. Can I borrow some money for 30 days? And so it was actually two weeks, but we extended it for 30 days because we know the lending environment and we know that it might get extended. So we're very, very familiar with all of these things. So we underwrote the property, did the same thing that we would do for our own deal, said absolutely, we will do this for you. We loan $163,000. It did end up taking 30 days. And on the very last day that it was supposed to fund, it funded. And we were all celebrating, but it was just, it was a way to use money that we were paying interest on anyway to be able to then help somebody else who just needed short term financing from point A to point B. And then the refinance happened. And you know, she would have gotten it from somebody other than us, quite frankly. But we were there and we were happy to help and it was a good thing.

Yes. So, and it's a win for, well, it's not only a win for us, it's a win for the investor, it's a win for the person that the investor was buying from. It's a win for everyone across the board. And so it's just a great feeling that we were able to do this to, not only to help her, but just, you know, now she's got another deal done. Yeah.

You know, and the investor that I was talking to was like, he was that much more confident in putting those funds in there because he was like, how do they do that? Are they really going to be able to pay me for the whole time when they're not even using it the whole time? It was a question in the back of his mind and I didn't think about that being a question for people. And now he was like, oh, I get it. Oh, this is great. Yes. Yes. I'm going to definitely be talking to my mom. We're going to be investing in Vet Fund and, you know, it's just a really neat eye opening experience for me.

That's awesome. Well, we like to try to keep these as short and sweet as possible, so we hope that you enjoyed this episode. If you're watching on YouTube, make sure you hit the subscribe button. Having trouble with that word today, but make sure you're watching on Facebook or LinkedIn. And our groups there, facebook.com groups freedom through passive income. That's right. Same thing on LinkedIn. But we don't have the cool little URL.

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All. Sam.