In real estate, timing is everything. By partnering with the right bridge loan lender, you can seize property deals before your competition beats you to them. But how do you choose the best bridge loan lender to work with?
At ABL, we specialize in providing short-term bridge loans for real estate investors nationwide. Whether you need to fund a fix-and-flip, BRRRR, or value-add project, our flexible bridge loan programs can help finance it from start to finish.
What Is a Bridge Loan Lender?
A bridge loan lender is a lender who issues short-term loans for real estate projects. The financing is designed to “bridge” the gap between when you close on a property and when you sell or refinance it.
Unlike conventional lenders, bridge loan lenders care more about the viability of the deal than your personal creditworthiness. For example, if they’re confident the property’s after-repair value (ARV) will exceed the purchase and rehab costs, they’re more likely to approve you for a loan.
Types of Bridge Loans
You can get different types of bridge loans for different projects. Here’s a quick rundown:
Fix-and-Flip Loans
Fix-and-flip loans are bridge loans for buying, renovating, and reselling homes. The loan helps fund the property purchase and renovations. Then after you sell the completed property, you use the sale proceeds to pay off the fix-and-flip loan and keep anything leftover as profit.
New Construction Loans
New construction loans are for building properties from the ground up. They typically cover the property purchase and construction costs, and are paid off once the project is complete—either through a property sale or by refinancing into a long-term loan.
Cash-Out Refinance Loans
A cash-out refinance loan replaces an existing mortgage with a larger one, letting you pull out the difference as cash. For example, if you own a $500,000 property with a $100,000 mortgage, you could refinance for $200,000, paying off the old loan and keeping $100,000 in equity to use toward a new purchase or renovation.
Rental Property Bridge Loans
Rental property bridge loans give you fast access to capital so you can acquire a rental property without waiting on slower permanent financing. For instance, if you find a great deal but don’t have time to close on a rental loan, an ABL bridge loan can close in as few as 10 days, giving you more time to lock in long-term financing later.
What to Look for in a Bridge Loan Lender
Now that you know what a bridge loan is and what types of projects they can finance, here’s what to look for in a bridge loan lender:
Local Expertise
A lender who knows your housing market can provide more tailored financing advice and resources. For example, ABL has local teams who know their markets inside and out and can connect you with their network of other real estate professionals.
Track Record
A proven track record of successful deals and satisfied borrowers is a strong indicator of a reliable lender. Before committing to one, check their online reviews and case studies to see how they’ve performed for other investors.
Loan Selection
Make sure a lender offers the type of bridge loan you need, whether that’s a fix-and-flip, new construction, or cash-out refinance. You may also want to prioritize lenders with a wide selection of loan programs so you can use them for other projects, too.
Flexible Terms
No real estate project is the same or goes exactly according to plan. Choose a lender who can tailor loan terms to your unique project and work with you if there are unexpected changes to timelines, budgets, etc.
Fast Closings
Closing speed is what sets serious investors apart from novices. If you want to secure deals and build a reputation for getting deals done fast, choose a lender who can close quickly. For example, ABL can close bridge loans in as few as 10 days.
Competitive Rates
Your interest rate affects your cost of borrowing and final ROI, so all else equal, you want it to be as low as possible. At ABL, we offer cash-out refinance loans with interest rates as low as 11% and fix-and-flip loans with rates as low as 8%.
Low Fees
Most lenders charge various fees for processing your bridge loan. At ABL, we charge origination fees of 0-2% and no prepayment penalty. By partnering with a low-fee lender like us, you can save on loan costs and boost your returns.
Transparency
Understanding your bridge loan terms is essential. Work with a lender who clearly explains all fees, terms, and repayment requirements upfront. For instance, ABL bridge loans feature interest-only payments during the loan term, with the principal repaid as a lump sum at the end.
Partnership
The best bridge loan lenders are more than just a lender. They’re business partners. Instead of choosing a lender who’ll disappear after closing, choose one who’ll support you throughout the investment process, from acquisition to exit.
Common Mistakes to Avoid When Choosing a Lender
Before you choose a bridge loan lender, here are some common pitfalls to avoid:
- Only looking at the interest rate. While you definitely want a low interest rate, don’t choose a lender based on the lowest rate alone. Some lenders may offer low rates but be slow or unreliable.
- Overlooking hidden fees. Always read the fine print on loan offers to ensure you understand the full cost. For example, some lenders charge prepayment penalties that could hurt your returns if you finish the project early.
- Not verifying their track record. Every new business relationship carries some risk, but you can reduce it by checking a lender’s history. Review testimonials and case studies to ensure they’ve successfully supported projects like yours.
Pre-Qualify for a Bridge Loan From ABL
Choosing the right bridge loan lender can make or break your next real estate investment. At ABL, we combine speed, flexibility, and market expertise to help investors confidently take on projects of all sizes. Whether you’re flipping or building, our team is here to help at every step.
Pre-qualify for a bridge loan from ABL today and secure funding for your next deal.