Multi Family Real Estate Investing How To Use Bridge Loans

Some investors might need a short term loan such as a hard money loan or bridge loan for flexibility.

Multi family real estate investing how to use bridge loans.

For the uninitiated a bridge loan is a short term obligation that leverages the equity in a property to complete the purchase of a new property. A multifamily bridge loan is a financial tool used by commercial property owners to bridge the gap between the moment they get the loan and the moment they can do what they want to do with the property. Short term multifamily financing is a nonpermanent multifamily loan that includes both hard money loans and bridge loans with interest only payments. Loan product availability may be limited in certain states.

Multifamily and commercial real estate bridge loan terms are usually between 3 months and 3 years most landing in the 12 24 month range. Commercial mortgage bridge loans are short term usually six to 18 months high interest rate loans businesses use to bridge the gap when long term financing is needed to buy a property but not. For example an investor may want to act quickly on a deal and finance it in the short term until they can renovate it or increase occupancy until they can meet the requirements of a longer term loan. Multifamily bridge loans can be taken out with fannie and freddie loans cmbs financing or other bank loans.

All loans are subject to borrower underwriting and credit approval. When using a bridge loan for a real estate transaction the buyer can immediately use the equity in their existing house to buy a new home without having to wait until the old home sells. These aren t loans for commercial properties such as shopping centers or big box store. Don t let the name confuse you.

Though bridge loans carry higher interest rates. But the truth is that a multi family property is more likely to be approved by a bank for a loan than the average home. Most of the same opportunities exist with commercial real estate bridge loans in general outside of fannie mae and freddie mac permanent financing options. Seasoned investors may consider commercial residential real estate loans.

Here are three reasons to consider investing in multi family real estate. Bridge loans are ideal for repositioning a property so as to get competitive permanent financing or sell the asset after the project is managed to stabilization or the issues at hand are addressed. This is not a commitment to lend.