How A Bridge Loan Can Help Secure Your Next Investment
Bridge loans have become a great way for investors of all experience levels to grow their real estate investment portfolio – especially if that portfolio is focused on single-family residential, short-term rental properties, and multifamily rentals.
Investors typically choose bridge loans because of the flexibility they offer. Bridge loans can fund a variety of projects – purchasing property under a tight timeline, renovating a fix and flip property and then selling the property (as in the B.R.R.R. method), or purchasing properties in foreclosure.
Real estate investors also use bridge loans when finding a new tenant, stabilizing the cash flow of a rental property, or resolving a short-term issue affecting the property. Bridge loans have fewer guidelines, restrictions, and underwriting allowing investors to have faster access to financing.
Choosing Bridge Loans in a Changing Rate Environment
Today’s market is actually ideal for many investors to create value using bridge loan structures. The higher-interest rate environment means that many investors are choosing to scale their portfolios through a bridge loan. When home prices and interest rates rise, it becomes more difficult for investors to obtain long-term financing loans.
For example, if a qualified investor comes to Lima One for bridge financing, they could take advantage of our fixed rates. Our interest rates are fixed throughout the term of our bridge loans – usually one- or two-year terms – so that investor’s rate wouldn’t change.
If the interest rate goes down, the investor would be able to pay off the bridge loan early – with no pre-payment penalty. If that same investor chose a traditional rental property loan, they usually would face a pre-payment penalty just to secure the lower interest rate.
Plus, Lima One’s bridge loans are interest only — allowing investors to limit financing costs during the life of the loan to increase cash flow or make it easier to carry properties until they are ready to sell.
Savvy investors who look at the big picture can see the value created by locking in a fixed-rate interest-only bridge loan product – allowing them to fund more of the acquisition and operational expenses – knowing they can pay off the loan early and opt for long-term take-out financing at a more favorable interest rate when one is available.
Why Investors Choose Bridge Loans
Bridge loans can be advantageous for investors and offer a different type of flexibility than rental, fix and flip, or DSCR loans. Most investors choose bridge loans because of the speedy close, fixed interest rates, and the project flexibility they give investors.
The quick, efficient, and simplified closing process give investors the ability to purchase a great investment property before someone else does. Lenders like Lima One can close quickly on bridge loans because they require less documentation and simplified unwriting based on the property’s value.
For example, a borrower purchasing property in bankruptcy or foreclosure may need to close quickly or purchase with cash and then quickly close a bridge loan to replenish reserves for the next short-term rental, multifamily, or fix and flip investment opportunity.
This interest only loan allows the investor to stay liquid while they prepare the property for a long-term strategy, whether it’s as a long-term term rental property, a fix and flip investment, or a short-term rental property.
Are Bridge Loans Right for Your Investment Strategy?
As an investor, what do you want from your real estate investment portfolio? Most likely, you want it to grow. Bridge loans are a great way to help your portfolio grow because of the versatility they offer.
A bridge loan is only as good as the lender behind it. If you want the most competitive rates and terms, along with reliably efficient closings, you need one of the best lenders in the industry that boasts a nationwide presence with a robust suite of loan products.
Lima One Capital offers the best loans for real estate investing from simple bridge loans, rehab and fix & flip financing, and stabilized multifamily loans to the most complex structured finance solutions.
When you choose Lima One Capital as your bridge loan lender, you can expect:
- Some of the industry’s most competitive bridge loan rates. Investors who choose a bridge loan with Lima One, can get up to 80% LTV, depending on investment strategy.
- The option to finance rehab property with construction bridge loans that can later be converted into a long-term fix and hold loan.
- A robust multifamily bridge loan program for investors interested stabilizing properties or value-add multifamily investment projects.
If you’re looking for a quick, streamlined lending process for your bridge loan, Lima One is the lender you can count on. With less underwriting and documentation, we can close your loan quickly.