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The Basics of Bridge Loans

When borrowing money for commercial real estate, getting the right loan can be challenging. Sometimes it takes a little time to get everything in order for your project. However, you may need to move quickly to take advantage of a time-sensitive opportunity. In these cases, taking out a bridge loan may be the right answer.



What Is a Bridge Loan?

Bridge loans are a form of short-term financing that is designed to be paid off when you secure a long-term loan or remove a prior obligation. They are typically used in commercial real estate when you either need funding quickly to buy a property or want to use an existing property as a down payment but haven’t sold it yet.

As the name suggests, the purpose of a bridge loan is to bridge the gap between your current finances and your long-term financial plan for the property. These loans are designed to move quickly and be paid off after a short timeframe.

Ways To Use a Bridge Loan

There are many ways to use a bridge loan for commercial real estate. These are a few examples:

  • Hedging Rates: If you ever thought that interest rates might decline in the next 6 months or so, a bridge loan would act as temporary, interest-only financing until the moment was right to convert to permanent financing.

  • Renovation: Alternatively, you may use one of these loans to renovate one of your buildings. This could allow you to attract more and higher-paying tenants, thus allowing you to pay off the loan promptly.

  • Flipping: A bridge loan may fit a property flip project. There are other hard money options for this, but bridge financing can be a good solution.

Benefits of Getting a Bridge Loan

There are many great reasons to consider taking out a bridge loan. The most significant is that they are fast-moving and very flexible. This can allow you to take advantage of real estate opportunities. Additionally, they are not necessarily that expensive if you repay them promptly and on time. In many cases, bridge financing is also non-recourse (only the property can be used to repay a defaulted loan).

Drawbacks of Getting a Bridge Loan

Of course, they aren’t without drawbacks. Most significantly, the interest rates and fees are high. Thus, if you hold onto your bridge loan for too long, it can start to become expensive. Additionally, bridge loans are sometimes associated with debt spirals that can threaten your business.

Learn More

With the right solution, you could achieve commercial real estate success. Contact one of our Funding Consultants now.


 
 
 

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ROC Financial Solutions, LLC. is an originating entity and financing consultant of business purpose funding.  9105 All Saints Road Unit D 330, Laurel MD 20723  ROC Financial Solutions, LLC. is licensed or exempt from licensing all states that they do business in.  We lend on real estate in AL, AK, AR, DC, CO, CT, DE, FL, GA, HI, IL, IN, KS, KY, LA, ME, MD, MA, MI, MO, MT, NH, NM, OH, OK, OR, PA, RI, SC, TN, TX, VA, WA, WV, WI, WY.   (Our down payment assistance program is available nationwide).  We lend on business loans in all 50 states.  ROC Financial Solutions originates loans under 12 CRF 1026.3 (a)(1) and 12 CFR 1024.5 (b)(2) Business purpose loans that are exempt from coverage under RESPA as defined by 12 CFR 1026.3 (a)(1) of Regulation Z.   ROC Financial Solutions, LLC only originates business purpose loans on non-owner-occupied residential and commercial, non-TRID regulated real estate properties, or business working capital loans.   Rates, terms, and conditions offered to qualified borrowers, may vary upon loan product, deal structure, location, lender, or other applicable considerations, and are subject to change at any time without notice.   Moreover, any rates, terms and conditions communicated via email shall only constitute a general, non-binding expression of interest on the part of ROC Financial Solutions, LLC., and the associated lender and do not create any legally binding commitment or obligation on the part of ROC Financial Solutions, LLC., and are expressly subject to, but not limited to, the credit, subject property, Investor experience, legal review, and lender approval process.  ROC Financial Solutions LLC., also operates as a Wholesaler on investment residential and commercial, non-owner-occupied properties.  ROC Financial Solutions, LLC., is exempt from licensing for these types of properties and is not a licensed real estate agent or broker.  The recipient of this message agrees to hold harmless ROC Financial Solutions LLC.  DISCLAIMER: ROC Financial Solutions does not finance owner occupied residential real estate. We offer commercial business purpose funding options strictly for non-owner-occupied real estate, and businesses.  Disclosure:  This is a partner program whereas ROC Financial Solutions LLC works with a private lender to offer these services, and ROC Financial Solutions will earn a referral fee from the lender for offering such services.  If you have received this message in error, please delete it.   Our Privacy Disclosure Statement can be found at https://www.rocfinancialsolutions.com/private-policy   Copyright © 2024 ROC Financial Solutions LLC, All rights reserved. 

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