Real estate investors commonly use commercial bridge loans when purchasing properties. Find out the best use for these types of loans.
Bridge loans are, as the name suggests, a bridge from one asset to another. Real estate investors often use these short-term, asset-based loans due to their rapid funding and easy qualifications. The term for this type of loan usually ranges from 3 to 12 months, though they may often be extended. Here are just a few of the many reasons commercial real estate investors are looking to this type of funding.
1. Provides funding for an additional investment property while you wait for another property to sell.
2. Quick capital for those properties that are being auctioned off and are acquired on a cash-only basis, or properties with multiple offers that will not accept a contingency based bid. A foreclosed property may come on the market and require quick action.
3. An investor is waiting for traditional funding and must cover expenses during this month-plus process.
4. If acquiring a property for a fix and flip, a bridge loan gives an investor access to quick capital that can be used for purchase and renovation. This same loan provides for interest-only payments during the renovation process and a principal payment after the property has sold.
5. When an investor needs additional funds to finish a project and get it on the market.
6. Some use these types of loans to buy out an investment partner. In this instance, funding may have initially been acquired using a participating mortgage loan. The lender, in these instances, becomes like a partner. And, as well all know, partnerships don’t always last.
The beauty of commercial bridge loans lies in their use of collateral to secure the loan. If an investor is confident in a commercial property but it currently does not have the needed loan-to-value ratio, they can fund a project through their own home’s assets and pay back the loan as soon as the investment property sells. Another benefit of an asset-based loan is that many hard money lenders will not take into account the creditworthiness of the applicant. They are more interested in the property and an exit plan.
Obtaining a Commercial Bridge Loan with a Hard Money Lender
Most bridge loans are obtained from alternative lenders. Private hard money lenders are one of the most common sources. They are specialists in asset-based loans making commercial bridge loans an ideal offering for their type of funding.
At Level 4 Funding, we specialize in short-term 3 to 12 month bridge loans with interest only payments starting at 7.99 percent. These may be extended up to 24 months and we fund up to 90 percent LTV.
We are interested in the project and you as a person more than we are interested in your credit history. We work with hundreds of private hard money investors, many of whom are interested in particular projects which include bridge loans for real estate investors. Call us for a no-obligation quote.
Dennis Dahlberg Broker/RI/CEO
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.
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