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Bridge Loans & Commercial Real Estate Investment
Bridge Loans & CREI
Bridge loans are a necessary financial tool for any commercial real estate investment enterprise. Often times commercial real estate investor frown upon the use of bridge loans. The common complaint is the 'cost of the money' being to high.
However, when the cost of losing a transaction is calculated, all of the sudden a loan with a higher, interest-only, interest rate doesn't look so bad. The point here is not to argue whether interest rates on bridge loans are high, we all can agree that they are some of the highest in the market today. The problem is the way we 'see' the bridge loan, I advise taking a different perspective.
Bridge loans should not be viewed as loans. When traditional loan will not work because the property does not qualify there are multiple ways a commercial real estate investor can get into the property. They can just pay all cash and do a refinance later, but this limits the number of deals the investor can do int he long-run.
Another tactic is to get equity investors, but they often want returns above 20% and many times want to stay in the deal as an owner of 50% of the project even after ... more
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