Hard Money Bridge Loans

November 29, 2010

In the real estate markets today, hard money bridge loans can be an excellent tool for people to bridge the gap between available financing options.

With the influx of hard money loan requests, I get a lot of people calling asking for a bridge loan. Often times, however, they are looking for a bridge loan on the advice of someone else and don’t really understand what a bridge loan is. Many times, they are not actually looking for a bridge loan at all!

A bridge loan basically a band aid type of loan. It is a short term fix for a short term problem. It bridges the gap between two more permanent types of financing.

One scenario where a bridge loan could come into play would be a construction completion type of project. These are common in the market today, as the real estate downturn left many projects started but not finished. In addition, the market took a lot of construction financing options off the table.

It is this situation where hard money bridge loans can be of good use. The purpose of a hard money bridge loan in this scenario is to provide the capital to complete the construction of an unfinished project, and upon completion the borrower is expected to take the bridge loan out.

By being able to complete the construction, the borrower may alleviate the issue that has precluded them from being able to obtain financing. Namely the fact that there is construction that needs to be done. By having a finished product, the borrower is then able to secure long term financing, often at better terms than the hard money bridge loan carries.

The other take out would be to sell the project at completion to take out the bridge loan. Either way, a bridge loan is not meant to be a lasting solution, only a temporary fix.

If you are in need of a hard money bridge loan, please feel free to call me directly today to discuss your options!

Posted in Hard Money, Loan Types