What Is a Multifamily Bridge Loan?
People use multifamily bridge loans to purchase multifamily properties, but they also use them to buy other kinds of commercial properties. For example, you may use the money that you obtain from these loans to finance a property that you would like to purchase. Then, you have the money that you need to ensure the building is up to code and to make any renovations and upgrades that the property needs. Multifamily bridge financing also provides you with money to keep the utilities on and pay the HOA fees while this work is being done.
The types of properties that multifamily bridge loans allow you to purchase include the following:
- Commercial retail locations
- Multifamily properties
- Other types of investment properties
Be prepared to discuss the plans that you have for your multifamily bridge loans with your lenders before you begin your new project.
Why Do People Take Out Bridge Loans?
Conventional loans that you take out to purchase a house take several months to receive approval. Because you may have deadlines to meet with your investment property, you don’t have the liberty of waiting that long to obtain the money you need. It will depend on the hard money lender, but it is likely that you will receive an answer and the money you need within days or weeks. You may even be able to receive multifamily bridge loans in as little as 24 hours.
A hard money lender will also agree to shorter loan terms, but you must be prepared to receive a higher interest rate and more expensive origination fees for the privilege of receiving your money so quickly. The purpose of multifamily bridge loans is to cater to your needs if you plan to fix up the property so that you can sell it quickly.s
How Do You Qualify for Multifamily Bridge Financing?
You can qualify for multifamily bridge financing if you have at least 20% of the purchase price to offer your hard money lender. If you currently have a mortgage on the house you are living in now, your lenders will want to make sure that you can make payments on your investment property while you also pay your current mortgage. In the event that you already have investment properties, your lenders will be interested in knowing about these. If you don’t have loans for any other properties, the lender will want to know your credit scores.