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 they've received their investment back. Then there is the bridge loan. Typically having 4-6 points of origination and a rate of 10-12%, interest only for up to 3 years and very low or non-existent prepay.
Bridge Loans - The Proper View
I suggest commercial real estate investors look at bridge loans as very inexpensive investment capital. It's short term, costs less than most equity partners do and will help get a deal closed fast! Commercial real estate investors should consider using bridge loan strategies to aggressively get into properties and instead of spending months and even years seeking out the 'perfect' loan.
DACL helps investors develop successful financing strategies so that they can expand their portfolios and bridge loan financing for commercial real estate investments of all kinds are part of the strategy. To learn more about bridge loans and to get a free analysis contact us today or apply online.
Bridge loan experts! Send us your opportunity we are in lending in all 50 states and focusing on bridge loans in the markets and submarkets listed in the S&P Case Shiller Home Price Index and the surrounding secondary markets to those cities. We look for opportunities in: Boston, Chicago, Denver, Las Vegas, Los Angeles, Miami, Fort Lauderdale, Orlando, San Diego, New York, San Francisco, Phoenix, Atlanta, Tampa Bay, Detroit, Minneapolis-Saint Paul, Charlotte, Dallas / Fort Worth, Portland, Seattle, Cleveland, Oklahoma City, Jacksonville, Indianapolis, Nashville, Kansas City, Louisville, Milwaukee, New Orleans, Philadelphia, Raleigh, Sacramento, Salt Lake City, San Antonio, San Jose, Saint Louis, Tucson, Austin, Baltimore.
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