By Terry Painter, Mortgage Banker
Member of the Forbes Real Estate Council
At Apartment Loan Store we have specialized in fast funding apartment bridge loans since 1997. Apartment bridge loans are used to finance apartment buildings that need remodeling or rehabilitation or are not stabilized (meaning they have lower than market occupancy and/or income). Our Multifamily Bridge loans typically have a term of one year to two years with rates starting in the five to six percent range for stronger borrowers and properties with a 30-day closing, and rates starting in the seven percent range for borrowers that have lower credit scores, lower liquidity, net worth or have properties that are in need of major rehab. We can close an apartment bridge loan in as little as 2 weeks. If you are looking for a value-added apartment building to purchase where you are obtaining it for well under its value, we can get you pre-approved in 24 hours. Our letter of pre-approval can be used with the seller to assist you in landing the property.
Almost all our apartment bridge loans have interest-only payments. In many cases there will not be a pre-payment penalty. But some apartment bridge programs require that the loan be taken out for a minimum of 6 to 12 months. If you pay the loan off prior to that period you have to pay the remaining interest. In many cases a payment reserve (an escrow account from the loan proceeds or your money used to make the loan payments) will be used if net income from the property is insufficient to make the payments.
Occasionally an apartment bridge loan is used for new multifamily construction when the borrower has difficulty getting approved for a conventional construction loan.
Apartment Bridge Loan Programs
Platinum Bridge Program
Rates starting at 5.75%, 1 - 3 -year term and loan to stabilized appraised value up to 75%. Available to higher net worth, higher liquidity investors or for properties that are doing well but just need some remodeling. Time for closing is 45 days. This loan program is typically recourse.
Gold Bridge Program
Rates in the 6.00% to 7.00% range, this loan is for properties in good neighborhoods. Up to 75% of appraised stabilized value. Perhaps the property has not been managed well and is just below market occupancy. Or perhaps the property needs some remodeling and repair. Also great for properties that need repositioning. Some remodeling resulting in rental increase or increased occupancy. This loan can roll over seamlessly to a great 5 - 30 year fixed perm loan. Loans are Non-Recourse.
Premium Bridge Program
Rates starting at 7.50%, 1-2 year term and loan to stabilized appraised value up to 75%. This loan is made primarily to the real estate and requires moderate borrower financial strength. Can be used to purchase value-added commercial real estate that needs some rehab at auction. Time for closing 2 to 3 weeks. Loans are Non-Recourse
Standard Bridge Program
Rates starting at 9.00%, 12- to 18-month term, and loan to values of 70% to 75%. This loan is made primarily to the real estate and can be used for construction, rehab or purchasing value-added commercial properties. Time for closing 2 weeks or less. These loans are typically recourse
Structured Equity Program
This program can lend up to a combined LTV of 85% with a 75% first mortgage and a 10% second mezzanine debt, preferred equity or joint venture equity. Typically Non-Recourse
Hard Money Bridge Loan
This program typically goes up to 70% LTV or 75% of cost if rehab is involved. Rates range from 9.00% to 12.00%. Great for borrowers with moderate or poor credit scores that want to fix and flip.