5 Questions to Ask a Commercial Bridge Loan Lender

Both seasoned and amateur real estate investors often find themselves with gaps in funding for projects. In these situations, commercial bridge loans can be a suitable solution. With flexible spending options under this style of loan, once secured, you can apply the funds across your financial statements, making this particular type of loan a good method to bolster your project portfolio. If you’re an investor looking for a bridge loan lender to suit your needs, consider asking a prospective lender the following questions.

How long does it typically take to close?

One of the major appeals of bridge loans is the speed at which the funds can be dispersed to real estate investors. Your lender of choice should be able to keep up with the speed of the real estate market and confirming the possibility of timeliness is critical to the process of awarding the loan. In other words, you should find a reliable lender to process and award your loan in a matter of weeks, not months.

What’s the average size of the loans they deal with on a daily basis?

Many lenders tend to specialize in specific loan sizes, similar to how they approach geographic markets. Certain lenders will inform you that they can directly lend on a specific amount, when in reality they are looking for partners to help them close. Simply put, you should vet your lender, especially if you are seeking a more significant loan.

What is the application process? Is it clearly stated?

Many traditional lenders demand a high degree of documentation throughout the investor’s application process. Beyond documentation, there can also be application fees associated with the process as well. Seeking out at private hard money lender will offer the sake of ease when it comes to documentation, as tax returns and bank statements are not always required by them. This isn’t to say that they aren’t reputable— they still want to understand the property and your plan to stabilize it. Overall, it’s critical to know the requirements before you begin.

Are they familiar with your market?

Of course, there’s a variety of lending institutions that offer bridge loans; however, it’s important to build your ideal loan package with a lender who is familiar with the area that you are working with. This holds true in all the facets of the real estate world, not just bridge lending. You want a lender that is familiar with your market and has experience lending on your property type.

How much insurance do I need?

To provide collateral for your loan, many lenders will require an investor to have an insurance policy on the property worth no less than 100% of that property. It’s important that you clarify those terms before taking out your loan. There could be additional recommendations for boiler and machinery insurance, and perhaps an annual inflation adjustment. Overall, it’s simply a good idea to bring this up when you are speaking with a potential lender. Most lenders will require a good faith deposit for 1-2% of the loan amount, which can be refunded at closing.

RCN Capital | Commercial Bridge Loan Lenders

Bridge loans are an essential aspect of the real estate industry, from fix and flips to new construction projects and everything in between. Regardless of their prominence, it’s crucial that you know if and when a bridge loan is the best financing option for your situation. If you’re interested in learning more about a bridge loan, but you’re unsure whether or not it would be the right fit for you and your project, talk to the experts. The team here at RCN capital will be glad to help you find the best option for your project goals. Pleasecontact us todayfor more information.