Commercial bridge loans can be a sound investment in the future, not just as a businessman in
need of one, but as an investor looking to make his money grow without taking
on too much risk.
You just got a nice bonus at work. As tempting as it would
be to waste the money on a sports car, luxury vacations, or the most impressive
home theater system ever built, you know you should do the smart thing and try
to make your money grow. Make the right investment decisions and you can still
have the vacations and home theater system after you retire and have time to
But your buddy lost his shirt in a recent investment, and
you are a little paranoid about suffering the same fate. What should you do?
What has a limited amount of risk, but still has a decent gain?
What is a commercial bridge loan? It is not unusual for a
business to need cash to keep from going into foreclosure or to cover costs
while waiting for long-term financing to be approved. In those situations, a
commercial bridge loan can be obtained. Since they are short-term and do come
with a little more risk than a mortgage, the interest rate will be a little
higher. So why should you invest in them?
If you allowed your money to be used for a commercial
mortgage, you wouldn’t see it all again for a very long time. Commercial bridge loans
, however, are
short-term loans (often from as little as two weeks to three years) so you will
see your money again a lot quicker than the 10-30 years it would take to get it
all back from a commercial mortgage.
Loans are secured by commercial assets so should the borrower
default your investment is safe. Your broker will have the loan placed in First
Position, so a default does occur when the property goes up for auction you are
As the borrower makes payments, you will receive monthly
payments as well a 6 percent yield. Most lenders will likely have no problem
reinvesting it so that your money can keep working for you.
If there were an investment that did not have some level of
risk, it would have people waiting in line to get in. Everyone wants to earn
money while not taking a chance on losing it. However, there is no such thing.
Every investment will have some percentage of risk.
With a commercial bridge loan, your investment is secured by
the commercial property the borrower used as collateral, but that does not mean
the borrower is going to make every payment. Business could fall off, demand
could slip, a scandal could taint the product or company, someone could
embezzle money—there is a host of things that could go wrong.
Yes, there is the collateral that will be sold at auction,
but there is no guarantee on how it will sell. So—is the risk worth the reward?
Only you can answer that question.
Level 4 Funding LLC
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701
About the author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true.
Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.