July 23, 2014
The question, “Are Bridge Apartment Loans Expensive” is a very good and important question. Why? Because if you do not have strong knowledge and strong experience getting a bridge loan, you could lose a lot of money, lose a lot of time, and gain extreme stress.
If you are very knowledgeable and have much experience in purchasing bridge apartment loans, you have the ability to make good money, save time, and have a positive bridge apartment loan experience.
Bridge apartment loans and other types of bridge commercial loans are an advanced loan strategy and are not for the beginning commercial investor.
Quite a few people will acquire commercial bridge financing because they find a “great buy.” It could be a multifamily property that appears to give you the opportunity to save lots of money. It has for example, 60% occupancy, needs quite a bit of rehab, and it’s been poorly managed. You can get it at 35% below what you’d pay if the property was in great shape, had very high occupancy, and very strong cash flow.
You need bridge financing for such a property because of low occupancy and the need for lots of rehab.
An inexperienced investor purchasing such a property could have a financial disaster if he lacks knowledge and experience in doing bridge loans. If on top of that he doesn’t have experience in doing rehabs, his financial disaster could be titanic.
This is because even experienced investors routinely underestimate rehab expenses, but for an investor inexperienced in rehab, expenses could be double what is originally estimated.
With other problems from lack of knowledge and experience, such as having problems getting occupancy up, underestimating the time period needed for the bridge loan, etc. – the investor who thought he got a good buy on the property could easily be in debt for many thousands of dollars when he completes the term of the bridge loan.
In commercial property investing, knowledge and experience are king.
Call or email me if you have questions concerning this article, apartment loans or other types of commercial loans. You can reach me at 214-695-7310 and firstname.lastname@example.org
Bruce Painter, Director of Marketing, Business Loan Store