A bridge loan is a type of short term financing, commonly used by borrowers, financed by hard money or private lenders. This type of financing solution that gives borrowers the opportunity to quickly secure their investment, make improvements, renovate, or add value.

Once this process is completed, generally under 12 months, the borrower can sell the property or refinance to hold the property with more conventional financing. Bridge loans can be secured by many property types such as, single family homes, multifamily properties, and commercial properties.

This type of loan is generally used to only secure a property. Unlike a fix-and-flip loan, the hard money lender will not have any reserve funds for construction or rehab.
Most traditional banks will not offer bridge loans. If they do, the borrower will most likely go under rigorous and time consuming underwriting. A borrowers tax returns are often the most important document for these kinds of lenders.

As opposed to traditional banks, hard money lenders mostly focus on the asset or subject property when underwriting. The subject property needs to have enough value to cover the cost of the loan. If the borrower were to default or a market correction were to occur, the investors will be able to recoup their investment into the loan.

A good hard money lender is risk averse and treats their investors and borrowers with the utmost care. The loan to cost, or LTC, is generally funded 60-70% of the purchase price of the property. At this valuation, the investors and borrowers can feel comfortable with the risk and equity in the property.

At Murk Investments, we are local to the San Diego area and are comfortable working in this market better than a national or regional lender. We lend on properties in most San Diego markets. One of the most important factors we look at is the cash the investor is bringing into the deal. All of our loans fall under a 65% loan to cost.

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