Multifamily Bridge Loans
LSG Lending Advisors specializes in private lending solutions, offering tailored multifamily bridge financing for apartments, student housing, senior housing, and other property types such as industrial, office, and retail. A multifamily bridge loan is an excellent option for those looking to complete their property purchase or cover short-term expenses. Here, you’ll find all the information you need about multifamily bridge loans and how they work, whether you’re seeking financing for apartments or other commercial properties.
Types of Multifamily Bridge Loans
Bridge loans provide flexible financing solutions for various property investment strategies. They are short-term loans commonly used in multifamily and commercial real estate investments. Below is an easy-to-read breakdown of the different types of multifamily bridge loans:
Purchase Bridge Loans for Multifamily Properties
- Purpose: Ideal for acquiring apartment complexes, student housing, or senior living facilities.
- Requirements: Typically requires a 20-50% cash down payment.
- Repayment: Structured for refinancing within two years.
Value-Add Bridge Loans for Commercial Real Estate
- Purpose: Designed for investors who want to increase a property's value through renovations or improvements.
- Coverage: Includes both acquisition and renovation costs.
- Use: Often used for deals exceeding $1 million.
Commercial Multifamily Bridge Financing
- Purpose: Short-term loans for apartment complexes and mixed-use developments.
- Use: Provides quick financing for acquisitions or strategic renovations.
Fix-and-Flip Multifamily Bridge Loans
Construction Bridge Loans for Multifamily Developments
- Purpose: Used for new multifamily construction projects, such as apartment complexes or mixed-use developments.
- Repayment: Provides financing until permanent financing is secured.
Open vs. Closed Multifamily Bridge Loans
- Closed Loans: Have a fixed repayment timeline with lower interest rates.
- Open Loans: Offer flexible repayment terms but tend to have higher interest rates.
First and Second Charge Multifamily Bridge Loans
- Purpose: Determines the priority of the loan compared to other loans secured against the same property.
- Use: Important for complex financing scenarios in multifamily investments.
What Is a Bridge Loan?
Bridge loans are a short-term option (up to 36 months) while waiting for long-term funding. Some Bridge lenders may offer additional 12-month extensions. A bridge loan works by providing an immediate cash injection to "bridge the gap," hence its name. Bridge loans can be used when waiting for the sale of a property to go through while purchasing another, for buying a property at auction, to pay for renovations, to bridge a broken property chain, to buy a second property, or to release cash flow.
How Does a Bridge Loan Work?
LSG Lending Advisors is proud to offer private lending multifamily bridge loans for properties such as apartments, student housing, and senior housing, as well as industrial, office, and retail spaces. Our multifamily bridge financing comes with competitive terms and a flexible prepayment plan, allowing you to prepay in whole or part on a scheduled payment date with a 1.00% premium during construction or until the final loan draw, and no premium after that. The rate adjusts quarterly over the 1-year U.S. Treasury Constant Maturity Yield Index throughout the term period.
We have an estimated pricing placement guide supporting multifamily bridge loans (apartments, student housing, senior housing), as well as industrial, office, and retail properties. This guide details what a bridge loan could look like and how they work.
Commercial Bridge Loans
There are different types of bridge loans that LSG Lending Advisors can help you with; regulated, unregulated, open, and closed. They each offer their terms and conditions. With an open bridge loan, there is no fixed repayment date, whereas a closed bridge loan requires you to have a fixed date for your repayment. Unregulated is the most common when dealing with a multifamily and apartment bridge loan as the property is a building used for business purposes or won’t be lived in by the borrower.
Contact Us
LSG Lending Advisors brings extensive experience in private-lending multifamily bridge loans, with experts trusted to guide you through all your options. Whether you’re considering open or closed loans, regulated or unregulated loans, our team is here to help you secure the ideal financing for your property. Contact us today to discuss your needs and explore how we can support your goals.
Frequently Asked Questions
Who qualifies for a multifamily bridge loan?
Investors, developers, or property owners with a strong financial profile typically qualify for multifamily bridge loans. Lenders generally require a credit score of at least 660-680, though some may be flexible with lower scores if other factors are strong. Borrowers should have a clear exit strategy and the ability to execute it.
What documents are required to apply?
Required documents usually include:
- Appraisal
- Demand Analysis or Independent Market Study
- Survey
- Phase I Environmental Report
What types of properties are eligible?
Eligible properties include apartment complexes, student housing, senior living facilities, and mixed-use developments.
What is the typical loan term?
Bridge loan terms typically range from 6 to 36 months.
What are the interest rates like?
Interest rates for multifamily bridge loans generally range between 9% and 12%.
Are the loans fixed or variable rate?
Bridge loans can be either fixed or variable rate, often tied to indexes like the 1-Year Treasury Constant Maturity Yield.
Can these loans be prepaid early?
Many bridge loans allow prepayment, though there may be penalties or premiums depending on the loan agreement.
How long does it take to secure a loan?
Bridge loans can often be secured much faster than traditional financing, sometimes in as little as 10 to 30 days.
How much can be borrowed?
Loan amounts vary, but typically start at a minimum of $1 million for multifamily properties.
What is the maximum loan-to-value (LTV) ratio?
The maximum loan-to-value (LTV) ratio for multifamily bridge loans is usually between 65% and 75%.
What are the risks associated with these loans?
Risks associated with these loans include: Higher interest rates compared to traditional financing; Shorter repayment terms; Potential for higher fees; Reliance on property performance or market conditions for refinancing
What are the advantages of using a multifamily bridge loan?
Advantages of using a multifamily bridge loan include:
- Quick access to capital
- Flexibility in use of funds
- Ability to acquire or improve properties that might not qualify for permanent financing
- Opportunity to increase property value before seeking long-term financing