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Commercial Real Estate Bridge Loans - What They Are and What You'll Benefit From Them

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John Wilson
Commercial Real Estate Bridge Loans - What They Are and What You'll Benefit From Them

When it comes to loans, a lot of people turn to traditional loan options such as banks, credit union, and other finiancial insitutions. But do you know that there are other real estate loan options available?


You would have come across the word commercial real estate bridge loan in the real estate industry. This bridge loan helps people who wants to purchase a piece of commercial real estate, and needs time to undertake some task such as property improvement, finding a tenant, or selling the property.


Continue reading to know more about commercial real estate bridge loan.


Understanding Commercial Bridge Loan


Here’s a scenario: You've located the perfect investment apartment building: a well-established property in a desirable location that requires some work to justify a rent rise. If you can acquire a loan from a bank or other traditional financial instituitions, financing the purchase and improvements will be easier, but your chances of receiving one are roughly 30 out of 100.


Instead of keep getting disappointed, there are other loan options for you to choose from. One of the best loan option to get is a commercial real estate bridge loan, also known as hard money fix and flip loan. This loan is advantageous to investors who do not have enough money to buy commercial real estate.


It may appear like understanding commercial real estate bridge loans is difficult, but it isn't. It is, as the name implies, a loan that "bridges" the finance gap that stops you from purchasing the property. One of the good thing about this loan option is that the lender structures commercial bridge loans to match the individual demands of each borrower.


This type of loan is usually for a period of 12 months or less and can be arranged in just a few days. Just like it is for most other types of property loans, collateral is required for an underwriter to back the loan. What's intriguing about a commercial real estate bridge loan is that the collateral can be the estimated value of the rehabbed property, which makes it a fantastic alternative for individuals who are new to the sector.


Real estate investors looking to purchase a fix-and-flip property sometimes use bridge loans. Obtaining a bridge loan allows an investor to swiftly close on a property that they know can be fixed up and sold. These are one sort of hard money fix and flip loan, and they are one of the ways real estate investors can scale their business and establish a portfolio by completing multiple fix and flips at once.


Benefits of a commercial real estate bridge loan


A bridge loan or hard money loan may be perfect for you if you'd want to take out a smaller financial investment in your next project, or if you're short on cash or liquidity.


It provides you with enough funds to get started and will be repaid after the project is completed, either by selling the home or by renting it out and converting it into a cash-generating asset, allowing you to qualify for a traditional loan.


When buying properties with cash out of your own pocket, it might be difficult and unrealistic to sustain a big number of acquisitions, which may limit you to only buying one or two houses at a time. However, by using hard money fix and flip loans, you can stretch your expenditures further and acquire cash promptly for your next buy.


Ready to Make your Next Real Estate Investment? 


Choosing a commercial real estate bridge loan or hard money fix and flip loan is an excellent way to secure your next real estate investment quickly. Get in touch with us today to talk about a bridge or hard money loan!


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