When Would a Multifamily Bridge Loan Be Most Advantageous?Paul Winterowd
Here’s the the good news: you’ve found the ultimate multifamily property that you’ve been looking for.
The bad news: you don’t have the funds needed to transition ownership within the seller’s timeframe, and for whatever reason, your current financing options are limited.
Many prospective property owners in this situation have seen investment opportunities disappear because they weren’t aware of alternative financing options. But here’s some additional good news: you are not destined to miss an opportunity simply because you can’t finalize your financing by someone else’s timeline.
Bridge Loans to the Rescue
Bridge loan services offer interim financing options that can support your property acquisition as you work on a permanent loan solution. This type of short-term, “interim” funding can come with a higher rate than you would expect with a standard loan, but you shouldn’t let your concern about paying more up front deter you from what could be an extremely profitable investment overall.
It’s vital to hone your financial perspective so you recognize the scenarios when a bridge loan would be helpful, as well as when it makes the most financial sense in both the short and long-term.
What to Keep in Mind When Working with a Lender
Typically, a bridge loan is most effective when it provides you the time to overcome any delays or challenges related to your ability to borrow. These may include:
- Lingering credit issues
- A current lack of consistent cash flow
- A need to close quickly
Lenders may be more willing to offer short-term funding services—and you may be more in a better position to satisfy their requirements—if you can offer the promise of a strong ROI. Be aware, though, that they may flag any property issues they believe can’t be resolved during the term of a bridge loan.
Don’t let financing challenges dissuade you from pursuing a commercial multifamily investment. Explore your options and weigh them based on your long-term investment goals.
Got questions? We’re happy to answer any you have. Contact us for a no-obligation conversation today.