How a Bridge Loan Could Save the Day for Your Next Real Estate Investment

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11 Jan 2022
5 min read
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Imagine finding the perfect real estate investment opportunity. It’s the exact type of property you’ve been searching for, at the right price point, with a motivated seller - but you need cash, and you don’t have it to spend right now. 

That’s where a bridge loan swoops in and saves the day. 

A bridge loan represents a short-term financing option available to real estate investors seeking a swift and straightforward means of acquiring properties. This financial tool offers investors the necessary funds to facilitate a purchase, bridging the gap until more extended, permanent financing options become accessible.

Let’s examine when, why and how you would go about using a bridge loan as a real estate investor.

When to Use a Bridge Loan 

Often, bridge loans serve as a financial bridge between acquiring a new property and selling an existing one. For instance, when an investor wishes to buy a new property but hasn't finalized the sale of their current one, a bridge loan can provide the necessary financing for the purchase until the sale is successfully concluded.

This could come into play if you are investing in a fix-and-flip property, as a bridge loan can help to fund both the property purchase and renovation - bridging the gap from the current property value to the future one. 

You may also use a bridge loan when selling one property and purchasing another. This is more common for residential homebuyers, but it can be useful for real estate investors as well. When you’re in the process of leveling up your real estate investment portfolio, you may choose to release one property and use the proceeds to invest in another. If you decide to not use 100% cash for the new purchase, a bridge loan can help you secure the purchase of the new property while you wait for the funds from a property you’ve recently sold. 

Lastly, bridge loans can be helpful in the case of time-sensitive opportunities like auctions or short-sales. 

Why Use a Bridge Loan 

In the fast-paced world of real estate investing, of course, most deals are time-sensitive. To stand out from the crowd in a competitive market, bridge loans provide investors with the funds they need in a quick, flexible manner. 

Unlike traditional loans, bridge loans are known for their rapid application, approval, and funding processes. Additionally, these loans can be used for various purposes, including property purchases, renovations, or refinancing. Investors can leverage bridge loans for deals that might not qualify for traditional financing due to factors such as property condition or location. This flexibility empowers investors to make deals on their terms and timelines.

Ultimately, if you find yourself in a position where your offer needs to stand tall above the rest, a bridge loan can be an important tool to have in your toolbelt. The swift approval and funding associated with bridge loans enable investors to make offers quickly and without contingencies. 

How to Use a Bridge Loan

Should you land on an opportunity where a bridge loan would be helpful, it’s best to first have a trusted lending partner to call to get the process rolling for you. That’s where Temple View Capital can help. We’re a private lending company built for real estate investors by real estate investors. So we understand the sensitive nature of each real estate deal. 

When you find yourself needing a bridge loan, contact us right away. Make sure you have the loan amount that you need, as well as the details needed to submit an application. Some details and documentation may be required. Our experienced team can walk you through that process.

If the loan is approved, you would then receive notice of that and the loan would close. In many cases, the investor will need to make interest-only payments on the loan during the term of the loan. Once the project is completed or the property is sold, the investor will need to repay the loan in full.

Preparing for a Bridge Loan 

Each real estate deal is unique, so it’s important to understand the process ahead of time. If you’re considering a future real estate investment purchase - whether it’s a bridge loan, DSCR loan, or ground-up construction - go ahead and contact Temple View Capital today

Let’s have a conversation now to make sure you’re prepared for a successful real estate investment in the future.