Real estate
· Answered by Relief Capital Funding Desk
The question
Our balloon payment on the warehouse comes due in about seven weeks and the refinance we have been working on will not close for at least four months. The building is worth roughly $2.1 million with $900,000 owed. What are the options besides handing the lender the keys?
With that much equity you have options, and none of them involve the keys. At roughly 43% loan-to-value you are asking a bridge lender to lend against a building worth well over twice what is owed, which is exactly the profile bridge capital exists for and one of the easier transactions in the market.
Loan-to-value most bridge lenders will reach on stabilized commercial property
65–75%
Indicative; the lender sets final leverage after appraisal and rent roll review.
Price it honestly before you sign. Bridge money is cheap by the month and ruinous by the delay: expect one to three points at closing, an interest-only payment well above your current note, and a term of six to twenty-four months. That is tolerable for four months and expensive for fourteen, so the real question is not what the bridge costs, it is how confident you are in the refinance closing date. Ask the refinance lender for their actual outstanding conditions before you commit, not after.
Bridge Loans are the instrument here and Commercial Real Estate Loans are what should take them out — worth asking whether the permanent lender will issue a commitment letter your bridge lender can rely on. Call the desk with the payoff statement and the appraisal date; seven weeks is workable, three is not.
Is your situation the same as this one?
It rarely is exactly. Fifteen minutes with the desk gets you this answer rebuilt around your numbers — no fee, no obligation.
Have a different question? Ask the desk and we'll call you back with an answer.