Fast Bridge Loans

by John King on July 11, 2013

Fast Bridge Loans for Commercial Property

Bridge loans by their very nature are fast because they are typically low risk, short to medium term loans where the lender has the benefit of having excellent commercial property collateral.  Bridge loans are usually closed very quickly because, more often than not, the situation demands it.

Financing Fallen Through at the Last Minute?

One unfortunate fact of life in the world of commercial real estate is that financing falls through ALL the time.

It seems like it shouldn’t be this way, but a surprisingly large number of transactions suffer a hiccup related to the financing along the way to closing.

This is where a good bridge lender really adds value, because if most (or all) of the third party reports are in hand then a bridge loan can literally be closed in a few days.

So if you already have an acceptable appraisal, title and everything else lined up, but your banker just called with bad news then a bridge lender is your white knight.

If you need a loan now (or at least very quickly), please contact me at 1-800-414-5285 or jking (at) green commercial capital (dot) com and I should be able to help.

Non-Emergency Situations

If you are not quite down to the wire, but you want the piece of mind of knowing you will be able to close quickly and you don’t want to (or aren’t ready to jump through) all of the banker’s hoops then the smart money is on bridge financing.

Many borrowers go the bridge route knowing full well it will cost them a little more in rate and fees, but an experienced investor realizes these are just opportunity costs.  Real estate is an investment and all investments have costs and it is better to spend a little extra to secure the right investment than to miss it completely.

Property Types

Commercial bridge loans are used to quickly acquire the following types of property:

  • apartment
  • multi-family hi rise
  • hotel
  • large and small retail center
  • senior housing and assisted living facility
  • industrial and warehouse property
  • flex space
  • self storage facility
  • mixed use property
  • many others

Large Bridge Loan Amounts

Very large transactions can be accommodated for the right borrowers/sponsors with the right opportunity.

During the past few years, opportunistic investors have used bridge financing to acquire large office buildings, condominium developments and hotels at steep discounts - often times when a property is in distress.

Bridge Loans for Refinance of Commercial Property

Bridge loans are frequently used for purchases, but they can also be used in the following situations:

  • Refinance of a maturing loan/balloon
  • Partner buyout
  • Building repairs prior to receipt of an insurance settlement
  • Foreclosure avoidance
  • Payment of a tax lien or judgement
  • Temporary construction take out financing
  • Discounted payoff (DPO)

Bridge Loan Rates

Bridge loan rates can really vary depending on the transaction and are higher than conventional commercial mortgage rates, but attractive terms are available.  Points are typically a little higher as well, but not dramatically so.

Stronger borrowers/sponsors with good projects and good equity can expect low rates.  As an example, for strong projects with strong sponsorship, “Bridge to HUD” loans can currently be funded under 5% with interest only payments.  A Bridge to HUD transaction is one where a savvy HUD lender underwrites the file with the expectation of HUD/FHA approval for the permanent financing, so this type of attractive rate is usually only available when the lender is very clear on the exit strategy.

Essentially, if a lender knows they have a solid take-out and they believe in the deal then better terms are available - simple as that.

When to Expect Hard Money-like Rates

Some transactions require hard money-like rates and points - for instance - when the permanent financing is still very much in doubt or when the borrower/sponsor doesn’t quite have all the attributes the lender would like him/her to have.  High rates and points are also charged in situations where the bridge loan will be used for a speculative deal and on transactions where a lot of work needs to be done to a property.  Lenders will close loans in this type of situation as long as they are comfortable with the as-is or “quick sale” value of the property.

There are, of course, some “opportunistic” lenders who will take advantage of some borrowers, but there a plenty of ethical, capable lenders who reward the prepared client with a strong transaction with reasonable rates and fees.

Some factors that will impact the terms you can expect:

  • location (deals are easier to get done in larger markets - NY, Los Angeles, Boston, San Francisco, Chicago, Miami, Houston, Dallas, Denver, Atlanta, etc.)
  • how fast you need to close (speed sometimes costs a little more).
  • how much you are borrowing (you might pay a little more in rates and fees for smaller loans).
  • how much equity there is in the project (the more the better).
  • your level of experience with this type of project (ditto)
  • whether or not the lender will be providing (or if you already have) a permanent loan to take out the bridge.

If the lender who is providing the bridge is also providing the perm (very common with a HUD take-out for apartments and assisted living) then the lender can be much “kinder” on the rate.

NON-Real Estate Asset-Based Bridge Loans

Although less common, other types of collateral can also be pledged for bridge financing including:

  • equipment with real value
  • accounts receivable
  • royalties
  • lawsuit settlements
  • publicly-traded stocks

Finding the Right Bridge Lender

If you need help with a bridge loan request or are not satisfied with what you’ve been quoted then please e-mail me at jking (at) green commercial capital (dot) com.

It is likely that I may know a lender with better terms and quicker turnaround…or at the very least I may be able to confirm that you can stop looking because what you have been offered is actually pretty good.

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