When to Use Bridge Loan Financing

If you’re struggling to find the financing you need for your next real estate investment, it may be time to take out a bridge loan. Bridge loans are highly flexible, short-term funding options that can help you create unique investment opportunities in real estate. Learn how to get the most out of this financing option with these tips.

A bridge loan is a flexible option because it uses the value of your asset, rather than your credit score. This makes it an attractive option for investors who temporarily have a low credit due to other investments or loans. Using this type of loan often requires you to provide collateral, whether it’s the property you intend to purchase, other property or valuable personal or professional equipment.

When you find the perfect investment opportunity, there could be a number of reasons that a typical loan isn’t applicable to your situation. Two popular options for bridge loans are medical offices and multifamily units.

A multifamily unit requires strict credit applications and heightened standards to receive a typical loan. The costs of new construction have also turned some investors away from this option. Instead, consider using a bridge loan to purchase and renovate an outdated multifamily unit. Once you purchase the property and make the necessary changes, you have two options. You can either refinance with a long-term commercial mortgage, or you can sell your multifamily property for a profit.

Either way, a prompt renovation timeline will prevent you from experiencing the negative effects of high-interest rates. Many bridge loan options come with higher rates than a traditional bank loan because they aren’t backed by a strong credit score and are meant to be a short-term solution.

Similarly, the rapid advances in the medical industry require medical centers to constantly update their property and equipment. Whether you need to update your current center or renovate a new purchase, a bridge loan can give you the capital you need without a strict credit check and other application requirements.

These are just a few ways that bridge loans help you create your own real estate investment opportunity. Look for a lucrative investment property today and find out how you can use competitive bridge loan options to secure, remodel and refinance an older property. This strategy helps you purchase properties that would otherwise be undesirable and add value to them for resale or to use for your next business operation.

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