Bridge Loans For Apartment Buildings and Commercial Real Estate

Non-Recourse Multifamily and Commercial Property Bridge loan rates and terms vary subject to sponsorship, loan amount, property type, leverage and the story behind the need for the bridge financing. Some common uses of bridge loans are: construction completion, stabilization, rehabilitation, and borrower/property legal, financial, and credit issues. Construction and rehabilitation rates can be very competitive, but once you get into legal, financial, and credit issues rates change a great deal. Bridge loans are ideal for repositioning a property so as to get competitive permanent financing or sell the asset after the project is managed to stabilization or the "issues" at hand are addressed. Multifamily bridge loans can be taken out with Fannie and Freddie loans, CMBS financing or other bank loans. Most of the same opportunities exist with commercial real estate bridge loans in general outside of Fannie Mae and Freddie Mac permanent financing options. 


Sample Bridge Loan Terms For Multifamily and Commercial Property

  • Size:                  $1 Million and up.
  • Term:                 6 months to 2 years (extension options available)
  • Interest Rates:  4.75%+ (for credit and legal issues rates are in the teens).
  • Amortization:    Generally interest-only
  • Maximum LTV:   Generally up to 75% of cost (LTC) capped at 70% of the completed or stabilized value. 

Advantages

  • Loan amounts are determined by total project cost or completed value and not necessarily on income in place or the as-is value, although in-place income helps drive down rates. 
  • Fast closing process.
  • Available when other portions of the credit market are locked up tight.

Disadvantages:

  • Very expensive if the loan is for financial, legal, or credit issues.
  • Loans are short-term and generally need to be replaced inside 24 months.