Over the years, there has been a tremendous increase in the purchase of distressed properties. The fix-and-repair business has proved to be profitable for many real estate investors. However, raising funds to buy a distressed house is no walk in the park. The need to secure quick cash led to the introduction of bridge loans. The excerpt will walk you through the ins and outs of commercial bridge loans.

Definition

A bridge loan is a short-term loan issued to real estate investors planning on fixing and repairing distressed properties. After renovations, the investor can resale the property and repay the loan to lenders. It is worth noting that bridge loans are issued against assets such as real estate property.

Benefits of Commercial Bridge Loans

1.        Fast processing

Unlike conventional bank loans, bridge loans are easy to obtain. This is mainly attributable to less documentation required by the lender. Borrowers are expected to provide collateral to secure loans. Also, you do not need to have good credit to have a bridge loan.

2.        Reduced Fees

With commercial bridge loans, you get to have low fees such as appraisal fees and closing fees. Additionally, you are cushioned from hidden costs associated with other types of loans. However, it is advisable to read through the terms and conditions before signing the agreement.

3.        High Loan-to-Value (LTV) Ratio

As a property flipper, you get to enjoy an LTV ratio of over 50% with bridge loans. This implies that you can use assets with a low value to get more financing for your venture.

4.        Flexibility

Consequently, you are allowed to pick a repayment schedule that is friendly to your cash flow. Therefore, you get to have a less stressful time setting aside money to repay the bridge loan. Moreover, you are not required to make a payment in the first month after obtaining the loan.

Final Remarks

Real estate investors in the property flipping business have found it resourceful to work with bridge loans. It is up to you to reach out to experts, such as Brave Capital Funding, for guidance on commercial bridge loans.