Realestate Information

In simple terms a bridge loan is a short-term, interim loan that is sometimes necessary to “bridge” a funding gap that can exist while arranging and closing more permanent financing or other financial transactions. For example if an investor is closing on an apartment building in 3 weeks and her bank can’t close her purchase loan for 3 months, she needs a 90 day bridge loan to get her deal done. Or an investor might be selling a building to raise cash that is needed right away, but it’s going to take at least 6 months to market and sell the building. A bridge loan is the answer.

Bridge financing is time sensitive lending that, almost always, needs to be arranged and closed quickly. Commercial real estate property owners, investors and developers must pay-up for the speed and efficiency that bridge lenders can provide. Rates on bridge capital start at around 10% and, depending on the perceived risk in the loan, can top out at 15% or a little more. If lenders and brokers add origination points a bridge loan can be very pricey indeed. Yet, commercial real estate bridge lending is a huge business with volumes counted in the hundreds of billions of dollars. Investors understand that, although costly in absolute terms, a bridge loan is much less expensive than taking on a partner who will demand 50% of the project forever, and a-heck-of-a-lot less expensive than