What is Bridge Loan?
A bridge loan is short-term financing (6-24 months) used to acquire a property before permanent financing is in place. Common in flips, BRRRRs during the rehab phase, and acquisitions where the buyer needs to close fast and refi later.
Bridge loans are essentially hard-money loans with cleaner branding. Terms: 6-24 month interest-only, 8-12% rate, 1-3 origination points, 70-80% LTV based on as-is or ARV. Approval often in 7-14 days versus 30-45 for conventional.
Used by flippers who need to close before a competing buyer can, by BRRRR operators during the rehab phase before the refi to DSCR or conventional takeover, and by 1031-exchange buyers who need to close the replacement property within the 180-day window before their original sale proceeds arrive.
Cost per deal is high (5-8% all-in including interest, points, closing) but the speed and flexibility often justify it on time-sensitive acquisitions. For long-term holds, refinance into conventional or DSCR within the bridge term to bring cost of capital down to 6-8%.
Concepts that connect.
A hard-money loan is a short-term, asset-based loan used by investors to acquire and renovate properties — typically 6-18 month terms at 9-13% interest with 2-4 origination points. Used when conventional financing doesn't fit (speed, condition, or borrower qualification).
BRRRR stands for Buy, Rehab, Rent, Refinance, Repeat — a real-estate investing strategy where an investor buys a distressed property cheap, renovates it, rents it out, refinances at the improved appraisal to recover most or all of the original capital, then repeats the process with the recovered capital.
Flipping is the strategy of buying a distressed property, renovating it to retail standard, and reselling at full market value within 4-9 months. Profit comes from the spread between all-in cost (purchase + rehab + carry + closing) and net sale proceeds.
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