- What are Commercial Bridge Loans?
A Bridge Loan is typically used to purchase commercial real estate quickly or refinance a property to forestall foreclosure or retrieve a property from foreclosure. Bridge loans are typically short-term loans used to “bridge” the gap between the transaction and the date long-term financing is secured. Bridge loans are almost always interest only and have a short time frame (6 months – 2 years).
- How Do Commercial Bridge Loans Work?
Just like any other commercial mortgage, the difference being the speed with which the loan can be closed and the terms. Commercial Bridge Loan providers generally require a minimum deal size, which varies from lender to lender. The loan amount will be determined by a combination of variables, i.e. value of property, cash flow it generates and net worth of the borrower(s).
- What do they work best for?
Commercial Real Estate deals that need to close ASAP. Conventional loans will take at least 60 days to accomplish. A bridge loan can usually be accomplished in 2-3 weeks.
Commercial bridge loans can be used for the purchase or refinance of office buildings, hotels, retail property, multifamily housing including apartment complexes, and even for raw land that will be developed for commercial purposes. A bridge loan may be your best option as well if you don’t have the the luxury of time.
- What are the Typical Terms, Rates & Fees?
Rates vary depending on the deal. The lowest rates will generally be 2% more than the current conventional rates and they can go as high as 6-8% more than conventional rates.
- How to Find a Qualified Bridge Lender?
In this day and age, a Google search is usually the easiest way to find a Lender but it’s tough to determine if they are actually a direct lender or just a broker posing as a Lender. Most mortgage brokers know one or two bridge lenders and real estate attorneys always seem to have at least one contact for a bridge lender. It will be important to do your due diligence.
H&O Capital will be glad to answer any questions for you.