The developer of a strip mall had a $10 million problem. If he couldn’t get a loan to cover the unexpected costs of repairing asphalt damaged during construction he would never reap the rewards from years of hard work. The bank which supplied the funding wouldn’t come through with any more loans. Taking on a partner would wipe out all of his profit and potentially take months to negotiate and finalize. What’s a developer to do?
The answer came from a savvy real estate broker who had been down this road before with other clients. He explained the option of a bridge loan to cover expenses in the short term. The loan could be arranged much faster than the other options and would cost a fraction of what losing the project could entail. Best of all, the bridge loan would mean the mall would open on schedule.
“The key thing for commercial real estate investors to understand,” says Kevin Wolfer, CEO and President of Kennedy Funding, “is that these loans don’t happen overnight. They can happen quickly, sometimes in less than two weeks, but it takes an experienced team to make that happen.”
When it comes to turning the proverbial sow’s ear of a project into a silk purse, the main issues are getting borrowers’ affairs in order. “It’s critical,” Wolfer says, “that borrowers have up-to-date title documents, a survey, a lawyer who has done similar deals, as well as a Phase I environmental report.”
“When all that is in place,” Wolfer concludes, “bridge loans can be the answer to reviving real estate deals that would otherwise be dead in the water.”