What Is a Bridge Loan?

How do real estate investors use these short term loans? What is a bridge loan?

A bridge loan is a very short-term loan – even shorter than the typical hard money loan. It’s used in real estate investing to fill any gaps left by a lack of funding. 

Most popularly, these loans help you bridge the space between one project and another.

Let’s say you’re just finishing up a flip. The house is on the market, buyers are showing interest, and now you’d like to get another property bought so you can jump right in to your next flip.

A true bridge loan covers up that gap between projects. You get the money to close on a new property before the first one is completely sold. A bridge loan lets you overlap from an old project to a new one.

When to Use a Bridge Loan

Real estate investors use bridge loans for all kinds of situations:

• When you’re buying a new property and already have one listed for sale
• When you need to cover down payment on a new property
• When you find a great deal but your bank’s financing won’t be ready in time
• When a wholesaler waits for a buyer’s money to come into the title company
• When a hard money or traditional loan leaves gaps in a project
• When you need to refinance a hard money loan.

Read the full article on bridge loans here.

Watch the video here: