November 29, 2022 Breaking News, Latest News, and Videos

Column: What is a Bridge Loan?

About the author: Avi Sinai is the principal of HM Capital, a Los Angeles company specializes in hard money real estate loan and private lending. To contact HM Capital you can call (530) 436-5630, or email all inquiries to avi@hardmoola.com

A bridge loan is a temporary loan secured by property, to provide capital to purchase additional assets until a more permanent financing can be secured. In most cases, real estate professionals use bridge loans to purchase a new investment before they sell assets they currently own, not to miss a good deal that can’t wait.

For example – a real estate investor finds an office building for sale in a great location. The seller will only accept cash offers, but the investor is currently short on liquid cash. With a bridge loan the investor can make an offer and have a chance to purchase the office building, and once the transaction is complete he can then sell of another asset to satisfy the bridge loan and secure long term financing.

How can real estate investors use bridge loans?

The best use for bridge loans is to secure a purchase of a new investment when you don’t have enough time to sell existing assets. When a good investment comes by, there is often not a lot of time to set up financing and it is possible that your current property will take longer to sell than the time it takes to purchase the current opportunity.

What are the advantages of using a bridge loans?

Bridge loans offer real estate investors flexibility – by leveraging the equity in an existing property into a second purchase of another investment. Because private lending uses asset-based underwriting, they are easier to qualify for and the process to get approved is a lot faster. Because the loan is for a shorter term, usually less than 12 months, the monthly payments are interest-only. By using bridge loans investors can make all-cash, non-contingent offers to lock up a deal and beat out other buyers with a superior offer.

What are the risks with bridge loans?

Bridge loans are short term – so they are due usually in less than 12 months and require investors to cover the debt quickly. Bridge loans also have higher rates and fees due to the risk factors associated with higher leverage. Bridge loans should only be used when you are confident you can repay it back within 12 months. A good alternative to bridge loans is a line of credit.

Summary

  • Bridge loans are short term loans to purchase real estate
  • Use equity in an existing property to purchase a new investment before selling
  • Flexible, but come with higher rates and fees
Related Posts

More Than 1,000 Food-Insecure Santa Monica College Students Gifted Thanksgiving Groceries

November 23, 2022

November 23, 2022

3rd Annual GIVING THANKS(giving) event returns By Sam Catanzaro As college students across Southern California continue to struggle accessing basic...

A SMa.r.t. Thanksgiving

November 23, 2022

November 23, 2022

SMart has much to be thankful for this year: We are thankful for the courage of all who face death...

Nourish L.A Feeds Thousands Each Week With Excess Food

November 23, 2022

November 23, 2022

Local organization Nourish L.A turns excess food into groceries for those who are food insecure in our neighborhoods and the...

Local Boy Scout Leads Effort to Fix Termite-Infested Trail Handrail

November 22, 2022

November 22, 2022

Ari Candela leads community service effort on a Beverly Hills hiking path By Keemia Zhang Last month, Ari Candela, patrol...

Pacific Park Presents An ‘A-Maize-Ing’ Ferris Wheel Thanksgiving Celebration With 90-Foot-Tall Turkey And All The Trimmings

November 22, 2022

November 22, 2022

Pacific Park on the Santa Monica Pier presents an “a-maize-ing” Ferris wheel Thanksgiving celebration with a fun, festive light program...

ICE Grand Opening Welcomes over 1,300 on Opening Day

November 22, 2022

November 22, 2022

ICE Santa Monica has returned for all day skating and fun for the whole family learn about what’s changed after...

SMMUSD Superintendent Leaving Post

November 21, 2022

November 21, 2022

Dr. Ben Drati to become Superintendent of the Bellflower Unified School District By Sam Catanzaro Santa Monica-Malibu Unified School District...

Two People Hospitalized in Ocean Front Walk Stabbings

November 21, 2022

November 21, 2022

Jamal K. Lampitt arrested in connection to November 17 stabbings Two people were hospitalized following stabbings on Ocean Front Walk...

Video Shows SMPD Officers Striking Alleged Homeless Man

November 21, 2022

November 21, 2022

November 12 incident to begins after man refuses to leave private residence By Dolores Quintana A video circulating on social...

Newsom to Release $1 Billion in Homelessness Funds

November 21, 2022

November 21, 2022

Move comes weeks after Governor holds funds citing lackluster plans to tackle homelessness  California Governor Gavin Newsom Friday convened local...

J.P Morgan Chase Seeks to Sell $1.4 Million Square Feet Of Office Space: Santa Monica Real Estate Report – November 21st, 2022

November 21, 2022

November 21, 2022

Property, Developments, And Listings On The Westside.*  A Mini-Mixed Use Building Coming to 2nd Street *  J.P Morgan Chase Seeks to...

Construction Underway For 98 Affordable Housing Units on South Thatcher Yard

November 21, 2022

November 21, 2022

Thatcher Yard Affordable Housing Project Breaks Ground on 2 acre 98 unit affordable housing community..Video sponsored by Bella Petite.

Local Man Sentenced to 9 Years in Federal Prison for Role in Scam Involving Fake Open Houses at Not-for-Sale Homes

November 20, 2022

November 20, 2022

Adolfo Schoneke sentenced to 54 years in federal prison in connection to $6 million real estate scam A South Bay...

Oracle Looking to Sell Santa Monica Office Space

November 18, 2022

November 18, 2022

Colorado Avenue property has 36 percent vacancy rate By Dolores Quintana A large tech company seems to be moving out...