Investing in a commercial property can be an exciting time and receiving multiple commercial lender offers can be just what you need to know that you are on the right track. But, in the spirit of things, it never hurts to double check to make sure your loan offers are offering you just what you expected.
More than likely, you have applied for a commercial bridge loan or two or even three and your lender offers are slowly coming in. Generally, it is at this time the tough decisions have to be made. In other words, when you are dealing with multiple offers, you need to truly weigh your options as no two lenders are completely alike. Since no two lenders are alike, this typically means that one commercial bridge loan offer will ultimately be better for you than the next. Thus, with that being said, it is simply your job to find that special one.
So, how can you find the best commercial bridge loan for you? Well, it pretty much goes without saying that you should always make sure the commercial loan offer you are leaning towards is the right size for your property or investment. For instance, many lenders offer property specific bridge loans such as small apartment bridge loans, medium to large apartment bridge loans as well as your standard bridge loans i.e. the larger bridge loan for commercial properties such as healthcare facilities, industrial warehouses, self-storage facilities, office buildings or retail properties and of course mixed use buildings.
As you will come to quickly learn, with bridge loans is not so much about how much you can borrow, but, rather what the minimum amount you need for your specific property is. Thus, you will often see small bridge loans starting at a required minimum of $1,500,000 (Max LTV 90%) with medium to large and standard commercial bridge loans starting at a required minimum of $3,000,000(Max LTV 80% to 90%). Therefore, to make a long story short, make sure your offers are covering the right property type and that you are ultimately choosing a loan that allows you to accomplish your plans without unnecessarily costing you a bundle.
How to evaluate the Terms of a Commercial Bidge Loans
In regards to your potential bridge loan term, of course, they will vary from—as previously stated. But, generally, you should expect loan term options that cover a short period of time (around 6 months is typical) and that may allow for a possible extension if you can’t accomplish your goals within the selected loan time frame. You can also expect to pay an origination fee and other minimal cost associated with your loan. Nevertheless, if you do find a loan offer with the right amount, a good rate, manageable payment schedule acceptable terms and conditions—well, then you’ve pretty much found your offer.
Ultimately, regardless of the lender you work with or the offer you end up choosing, you can also expect your bridge loan to require that you have a minimum of 75% in equity/ collateral.
Dennis Dahlberg Broker/RI/CEO/MLO
Level 4 Funding LLC Private Hard Money Lender
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701
About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.