When is the best time to seek a multifamily bridge loan rather than a traditional multifamily loan?
In a word: Now.
In more words: Multifamily bridge loans can be the ideal solution for today’s volatile market.
Why? Multifamily bridge loans provide borrowers immediate financing to bridge the gap between current and future needs.
Of course, multifamily bridge loans aren’t the right answer for every situation, every time. Read on to learn about the difference between the multifamily loan types–and when and how to most effectively use a multifamily bridge loan.
What makes multifamily bridge loans different than traditional multifamily loans?
The two loan types differ in several ways:
Length – Bridge loans are short-term or interim loans, their terms are typically a few months to two years, so that borrowers don’t get locked into a loan for the long haul.
Closing Time – Bridge loans usually close much (much) quicker than traditional loans. With iBorrow, borrowers can close a multifamily bridge loan in as little as two to four weeks.
Flexibility – Traditional lenders tend to be rigid, financing a property after it’s been leased or once renovations are complete. Bridge loan lenders, on the other hand, are nimble and accommodating, often working with borrowers based on the business plan for the property or a borrower’s past success with similar properties, making access to financing faster and easier.
Prepayment – Want the option to prepay? You’re in luck. Many bridge loans offer borrowers the ability to prepay with little or no penalties compared with a traditional loan. You can read more about prepayments in our blog here.
Availability – In today’s market, in which financing is difficult to obtain, and with few lenders making loans, well-capitalized bridge lenders like iBorrow can offer fast reliable financing, including multifamily bridge loans.
When can multifamily bridge loans be used?
Upgrading a Multifamily Property – For borrowers with vision, bridge loans can be a boon. With a bridge loan, borrowers can purchase a property in a promising or growing market and upgrade into full lease or higher rents. This is in stark contrast to traditional lenders who might be hesitant to finance a property solely based on a borrower’s plan to upgrade. Once the property is trending towards full lease-up, the likelihood of securing traditional financing, or even selling the property becomes much more likely.
Repositioning a Property – Similarly, a borrower might see a great opportunity to reposition a property into a multifamily property, but securing traditional financing will be challenging until the repositioning takes place. A bridge loan allows borrowers to secure the funds they need to reposition the property and gain lease-ups and strong rental histories, after which they can then seek traditional financing or a sale.
Immediate Opportunities to Acquire Property – Because a bridge loan is often the fastest path to financing for multifamily borrowers, it enables investors to jump on opportunities more quickly. Once the property shows signs of improvement and stabilization, the borrower can then refinance at a lower interest rate for a longer term.
Acquire a New Property Before a Current Property is Sold – For borrowers who own multiple properties, bridge loans can enable them to secure financing to quickly buy a new property without having to rely on selling their current property. With the increase in rent or proceeds from the previous property’s sale (if they choose to sell), the borrower can work to repay the bridge loan, then secure longer-term financing for their new property.
iBorrow: The go-to lender for multifamily bridge loans
Bridge loans are a bridge to the future.
A bridge loan can be a powerful tool for multifamily borrowers and investors, especially in today’s high-interest rate environment.
With a track record of over $1Billion in closed loans, two to four week closing times, and a 100% track record for meeting funding dates, iBorrow is the premier option for commercial real estate borrowers looking to acquire fast, reliable financing.
Check out some of iBorrow’s recent multifamily loan closings below:
Ready to bridge the gap between you and possibility? Reach out for a consultation.