If you own commercial real estate and want to use the equity to help with another purchase, particularly a new property, a bridge loan may be for you. Bridge loans can be powerful tools for people who want to take more control of their real estate investing opportunities. Whether you are seeking an owner-occupied or investment property, this could be an answer for you.

What Is a Bridge Loan?

A bridge loan is taken out when you are planning to sell a property to fund another. It allows you to borrow against the equity of the first property to help with the financing of the second. The intention is that you will sell the first property in order to pay off the loan.

For example, you may be moving your business from one location to another. However, you can’t sell the original property before moving. Therefore, you need a way to get the down payment of the new real estate. A bridge loan lets you “bridge” the gap in your between selling your property and covering the down payment of a new building.

What Are the Benefits of a Bridge Loan?

The key benefit of using a bridge loan is that you can buy without having to worry about immediately selling your existing property. You can also make offers on new properties without needing a contingency that you will sell your previous real estate.

Additionally, a bridge loan could help you to take advantage of a time-sensitive opportunity. Typically, you can secure a down payment using a bridge loan very quickly. So, you don’t need to make other funds available to help you secure a new deal. In some cases, businesses use bridge financing to cover a large percentage of the cost of the new building.

When Would You Want To Use a Bridge Loan?

There are many types of situations in which you could use a bridge loan. For example, capital availability for multiunit residences has tightened. So, you may want to leverage your existing equity to help pay for the acquisition of a new property.

Alternatively, you may be moving your operations from one location to another. You need to own both buildings at once to be able to successfully transition. A bridge loan can help make that happen.

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