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Investor Financing Podcast


Mar 24, 2021

Multifamily Bridge Lenders- Fast Close and Higher Leverage

The most common uses of bridge loans are to quickly purchase a property when all cash isn’t an option and the property is not stabilized (occupancy is under 90%)

There are several factors that differentiate bridge loans from more conventional kinds of loans:

Term: Traditional mortgages span a much longer term than bridge loans, which typically only range up to two or three years. The name “bridge” is meant to signify a short waiting period while more permanent financing is secured.
Interest rate: Bridge lenders take on larger risks, including liquidity, default and informational risks. For this reason, mortgage rates are generally higher.
Amortization: Most bridge loans are interest-only, with little or no principal amortization. The full principal amount is usually due at maturity, and negative amortization and zero-coupon notes can be an option in some cases.
Collateral: There’s a focus among bridge lenders on underlying collateral, rather than the typical emphasis put on creditworthiness.
Timing/Flexibility: These loans can be provided in under 30 days, and have more flexibility in structuring and due diligence requirements. They can be expedited much more quickly than typical loans, which often take 90 days or more.

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