Commercial Loans Blog

In-House Bridge Loans:

Bridge loans are just that, interim loans to "bridge" the gap between the current situation and the exit strategy.

Bridge loans typically have some cash flow but for some reason, will not qualify for conventional lending right now.

You see these mostly on investment properties.

For example,  

we just closed a $2 million plus  

bridge loan  

on an

apartment complex purchase.

A very common type of bridge loan.  Because the complex was only 67% occupied and needed work, it would not qualify for conventional financing.   

Experienced investors with good credit are beginning to gobble up these types of properties at great prices and with their knowledge and some work; they can often fill the property up in less than a year.   

Bridge loans are typically:

• 75-80% of value/sales price
• 10-12% in interest rate
• 2-3 years fixed
• interest only payments
• points can range from 2-6

Is it cheap? No.  But, the borrower cannot get a FNMA rate of 6% right now.  The key is, they are buying a property at $2 million say, that once full, will be worth $4 Million - doubling their money.  Then, a refinance to a 6% rate is easy.  The result is $2 Million in profit!  Yes, the rate they paid was 6% higher than normal for 1 year but that extra interest of $120K yielded them a $2 Million return.  What a deal!  We can close these deals quickly - in less than 30 days.