Bridge Money is Here

Terrydale Capital

01 September, 2021 · 5 min read

Recently, the Washington Post published an article about seniors who felt stuck in their homes. According to the post, these seniors did not qualify for new mortgages and couldn’t refinance their existing ones. The post struck a nerve, with many readers relating to the agony of being turned down (everywhere) for a loan.

(Of course, we have the pandemic to blame for the situation.)

But despite the continuing market upheavals caused by COVID-19 and its economic effects, real estate investors have a way out. They can leverage the available bridge loans to get ahead of the game.

What is a Real Estate Bridge Money?

Real estate bridge money refers to a short-term, high-interest loan, with a typical term duration of six months to three years.

Bridge money is often secured by real estate assets, giving investors quick access to capital. The loan is refinanced with traditional bank loans and is available for both businesses and individuals.

Case example

In 2016, Olayan America Corporation wanted to buy the Sony Building but didn’t have enough capital. So it secured a short-term loan from ING Capital. The bridge loan was approved fast, which allowed the Olayan America Corporation to acquire the Sony Building with dispatch. (The short-term loan helped Olayan cover part of the down payment costs on Sony Building until it secured long-term funding.)

Who Is Bridge Money for?

Bridge money is a viable option for investors in need of fast-track access to capital. It’s also ideal for real estate investors ineligible for traditional banks loans. Whatever the case, though, the borrower must:

  • Meet the lender’s qualification criteria
  • Have the right collateral

Overall, bridge money is ideal for:

Time-Sensitive Acquisitions

An investor may come across new property investment opportunities that are time-sensitive. Taking out a bridge loan will help them secure the needed capital fast and seal the deal on the identified properties. (The short-term loan provides quick funds, which the investor can leverage as they await more permanent and long-term funding.)

Case example

Take an investor, a prominent real estate firm that owns and operates residential or commercial properties in downtown Abby. A rival real estate firm moves to the city and erects an eye-catching apartment with all the goodies the city dwellers have been eyeing.

Before the building is open, the rival firm runs out of money and announces they want to sell the property.

The distressed rival put the apartment (appraised at over $750M) on the market for $500M. The investor, ready to pounce on the heaven-sent opportunity, can only raise $100M towards the purchase of the apartment. As a wise business person, the investor understands owning the building can repay their current loan; however, they acquire the $400M difference.

Doing all they can to embrace the opportunity, the investor seeks a bridge loan from an originator, capital firm. The capital firm can provide the $400M difference (80% LTV) in time to seal the deal.

The capital firm offers to loan the investor the $400M at a 5.5% interest rate, repayable within 12 months. The investor accepts the loan terms, acquires the capital, and uses the fund to close on the property. The investor then repays the capital firm the agreed monthly payouts within the stipulated 12 months. At the end of the loan duration, the investor repays the capital firm and refinances the apartment with traditional bank loans at lower interest rates.

Renovations (Value-Add Multi-Family & SFR Investments)

Bridge loans are ideal for an investor looking to modernize their building’s vacant units to attract higher-end tenants who can pay higher rents. That’s commonly known as a value-add investment.

In value-add bridge lending:

  • A distressed real estate asset (or one needing capital improvements) is purchased.
  • The property undergoes construction/renovation within the stipulated timeframe and budget.
  • The renovated property is leased or sold at a price inclusive of renovation costs, financing costs, acquisition costs, and profit.

It’s also viable for investors looking to buy and hold real estate assets until their value has significantly increased.


A bridge loan is also suitable for investors looking for capital to support a given construction development, after which they’ll either lease or sell the units to get income.

Construction bridge lending is characterized by delayed withdraws. Thus, the investor (borrower) can only draw from the loan after meeting the stipulated construction milestones or criteria. Withdraws can follow:

  • An expense reimbursement schedule – where the investor provides invoices and receipts to the lender as proof of having achieved the set milestone. Or
  • A drawdown schedule – where the lender releases funds as per the milestones in the development process. (Here, a third party oversees the development process to ensure the investor attains the target milestones before the lender can issue the funds.)

The delayed draw technique is a risk mitigation measure (on the side of the lender.) The goal is to ensure the value of the attained construction milestone matches the loan.

Construction bridge lending is valued differently, too. The valuation considers any changes made to the property: before construction, after completion, or after completion and occupancy.


If a real estate buyer has a lag between the sale of the current property and the purchase of another, they can benefit from bridge money.

Typically, the borrower (investor) must have:

  • Excellent credit ratings
  • Low debt-to-income ratios
  • Significant property equity (in the original real estate asset)
  • A clear exit strategy (in terms of sale or refinancing)

The bridge money rolls the mortgages of two buildings together, giving the investor the flexibility as they wait for their old property to sell. In most cases, however, lenders only offer up to 80%

LTVs (Loan-to-Value.) That means the investor must have adequate cash savings on hand or substantial home equity in their original property.

Real Estate Un-Related Needs

Investors looking to buy out their investing partner can leverage the value of their current properties to acquire a bridge loan.

Why Bridge Loans?

Investors should consider bridge loans for the following reasons:

  • A higher leverage bridge loan provides additional dollars when purchasing a property. Additional rehab budget proceeds are included in bridge loans to provide quick access to capital needed for projects.
  • Investors can purchase new properties and put the old ones on the market without restrictions.
  • Faster application processes. That translates to fast and convenient access to capital. Consistent low risks and high rewards when compared to investments yielding fixed incomes.
  • Increased acceptance for an investor’s purchase offer due to reduced contingencies of the sale
  • No rigid “algorithms” like the ones used by traditional banks to turn down loans
  • More flexibility. The investor can gain a couple of months free of payment.
  • Lenders can accept credit ratings that are not quite perfect – especially if the investor has a high income and payment history.
  • Under certain circumstances, the investor can still acquire a new property even after removing the contingency to sell
  • Fund projects and properties that government-backed organizations would never lend on.
  • Lenders are beginning to understand better the need for this type of loan product. That means bridge loans are becoming more competitive and readily available in the market.
Bridge money boasts the following benefits:

Competitive Lending Structures

As mentioned above, lenders are beginning to understand the need for bridge loans, making them more competitive and readily available. Real estate investors can obtain high LTVs. The maximum leverage in the market is up to 85% LTV, which is quite decent. Qualified borrowers only need to look for 15% more to fund their projects.

Better still, qualified investors can access non-recourse options, shielding them from losing non-loan-related assets in case of deferred payments.

Some lenders provide bridge loans that are repairable within 36 months, without additional charges. The investor can also shop around for better rates. Think of sub 4% rates.

Quick Access to Capital

Bridge loans are famous for their fast-track access to funds. That makes them ideal for investors needing additional dollars for purchase power. Or rehab budgeting and carry costs on light & heavy lift value-add investment deals.

Investors have the short-term flexibility to proceed with their plans of acquiring real estate assets before they can obtain more long-term funding.

Bridge loans are not without limitations. Their cons include:
Higher Risk Exposure

The high-risk exposure goes both ways. To lenders, there are rent roll turn, cost of rehab, and speculation of future value.

Investors on their end must have a clear exit strategy. Failure to, they can find themselves financing two properties for quite a period while repaying a high-interest loan to their lenders. (Talk of stress, huh?)

Potential Additional Costs

Despite having higher interest rates than traditional bank loans, bridge loans have a high potential for additional costs. Think of appraisal fees, administration fees, escrow fees, wiring fees, notary fees, title policy fees, inspections fees, exit fees, and so on.

When to Take Out Bridge Loans?

Many investors harbor concerns about the future of the real estate market, especially amid the pandemic. And while some sectors are hit hard than others, leveraging these downturns can be a financial boon for short-term and long-term investments. Bridge loans provide investors with low risks and high rewards needed to take the leap.

When ready for the most competitive financing structure in the market for your value-add Multi-family or SFR portfolio deal, contact the TDC Team at 214-241-4230.

Then Again, Why Wait When You Can Take Out the Loan Today

To benefit from the current downturns requires you to take action today.

So why not get a quote today? Mention code “BRIDGE” to get a free appraisal cost waiver with Terrydale Capital financing. We offer: 

  • Up to 85% of LTV
  • Sub 4% rates
  • Up to 36-month terms (interest only)
  • Non-recourse options

Want to receive Weekly Market Updates, Deal Spotlights, Off-Market Opportunities, and Referral Rewards such as an iPad, Bose Headphones, Peloton, or a $2,500 Appraisal Fee Waiver? Click Below

More Deals and Updates

$1M Multi-Family Acquisition in Irving, Texas

$1M Multi-Family Acquisition in Irving, Texas

DEAL SPOTLIGHT $1M Multi-Family Acquisition in Irving, Texas22 September 2022 · 3 min readToday’s Deal Spotlight takes us to Irving, Texas, and centers on the $996,000 acquisition of a multi-family property. As the deal progressed, additional paperwork became...

$2.3 M Multi-Family Acquisition | San Antonio, Texas

$2.3 M Multi-Family Acquisition | San Antonio, Texas

DEAL SPOTLIGHT $2.3M Multi-Family Acquisition in San Antonio, Texas 14 September 2022 · 3 min readToday’s Deal Spotlight takes us to San Antonio, Texas, and centers on the $2.31 million acquisition of multi-family property. Our client was clear on what they wanted...

$5.6M Multi-Family Acquisition | Waco, Texas

$5.6M Multi-Family Acquisition | Waco, Texas

DEAL SPOTLIGHT $5.6M Multi-Family Acquisition in Waco, Texas 15 September 2022 · 2 min readToday’s Deal Spotlight centers on the $5.6 million acquisition of a multi-family commercial asset in Waco, Texas. What We Were Up Against Our client was on a strict timeline,...

Understanding CMBS Loans

Understanding CMBS Loans

Learn Understanding CMBS LoansSeptember 15th, 2022 · 5 min readWith so many loan types available, it’s important for commercial real estate investors to understand their financing options. A commercial mortgage-backed securities (CMBS) loan represents an attractive...

$5M Self-Storage Refinance in Lexington, NC

$5M Self-Storage Refinance in Lexington, NC

DEAL SPOTLIGHT $5M Self-Storage Refinance in Lexington, North Carolina8 September 2022 · 3 min readToday’s Deal Spotlight takes us to Lexington, North Carolina, and centers on the $5 million refinance of a self-storage real estate asset. Closing a deal on a facility...

What Is Triple Net Leasing?

What Is Triple Net Leasing?

Learn What Is Triple Net Leasing and How Can It Help My Investment Strategy?September 1st, 2022 · 7 min readCommercial real estate investors have many options to choose from when it comes to leasing agreements. Triple net lease (or “triple-net” or “NNN”) properties...

State of the Market | August 2022

State of the Market | August 2022

Market Updates Commercial Real Estate Market Update | August 2022August 25th, 2022 · 4 min readTerrydale Capital is actively providing capital solutions to our clients. We are constantly in discussion with our capital market resources and identifying new resources...

Multi-Tenant Retail Acquisition | McKinney, Texas

Multi-Tenant Retail Acquisition | McKinney, Texas

DEAL SPOTLIGHT $2.9M Multi-Tenant Acquisition | McKinney, Texas18 August 2022 · 4 min read This week's deal spotlight focuses on an acquisition loan for a multi-tenant retail asset in the amount of $2.9 million. Located in McKinney, TX, this property was purchased...