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What is a Multifamily Bridge Loan?
Multifamily bridge loans are short-term, temporary financing, used by real estate investors to purchase, remodel, or refinance an apartment complex with five or more units.
These loans are typically held for 6 months to 3 years, at which point borrowers either sell the property or refinance into a traditional bank loan.
Multifamily bridge loans are financed with a main focus on the equity and value of the collateral property, as the primary factor, rather than a borrower’s credit score, income, or financial history.
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Asset-based: Approval is determined by the property’s value, not the borrower’s financials
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Purpose: Bridges the gap between temporary and permanent bank financing
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Flexible: Funds can be used for purchases, renovations, stabilizing a property, or to refinance into a conventional bank loan
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Fast Closing: Funding can be completed in 5 to 7 days, unlike banks, which can take months
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Interest-Only: Expect to pay 8% to 15% interest-only, helping preserve cash flow by not needing to pay down principal right away
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Exit Strategy: Bridge lenders want to hear a sound exit strategy. Common strategies include selling the property or refinancing with a bank.
How Multifamily Bridge Loans Work
Pre-Approval
Get in touch with a bridge lender, and they will ask basic details about your property and your financial strength as a borrower. Normally, within 5-10 minutes, they will be able to determine if your loan is feasible or not.
Property Evaluation
The bridge lender will either hire an appraisal company, a broker's price opinion (BPO), or evaluate the value of your property based on recent comparable sales in the area.
Factors such as current condition, occupancy, and upside potential will also be taken into consideration.
Loan Terms
Expect interest-only payments for a short duration, usually less than 2 years. This is due to lenders being cautious about protecting themselves due to fluctuations in the real estate market.
Sometimes options to extend the loan will be available; it’s best to ask up front.
Funding & Closing
Once approved, funds will be released to escrow, which will then disburse the money to the buyer based on the agreed terms. This process is fast and only takes a few days.
Exit Strategy
Multifamily bridge lenders will want to know your exit strategy before funding the loan; they want to know how they will be repaid. Standard repayment methods include selling the property, refinancing with a bank loan, or paying off the debt using other outside funds.
Why Real Estate Investors Use Multifamily Bridge Loans?
When real estate investors find themselves in a temporary cash crunch, bridge loans provide economic relief as a flexible alternative financing option.
Situations such as financing gaps, short timelines, and quick renovation projects often don’t make sense for traditional bank financing due to its slow and impractical nature for investors.
Instead, multifamily bridge loans offer investors a more flexible solution to obtaining financing fast.
Multifamily bridge loans help real estate investors capitalize on attractive market opportunities and stabilize properties with low occupancy or deferred maintenance until they are eligible for conventional bank financing.
Benefits of Multifamily Bridge Loans
Speed
- Buyers who make all-cash offers on multifamily properties outperform buyers with traditional bank financing.
- When timing is critical, bridge lenders provide fast access to capital, allowing savvy investors to move quickly on attractive deals.
- Unlocks opportunities to acquire undervalued assets, fund renovations, or stabilize operations before refinancing into more cost-effective long-term debt.
Flexibility
- Bridge loan lenders, like Crescent Lenders, can tailor loan terms based on your unique property and investment strategy.
- You can control the asset now, then bridge later to permanent financing via a more traditional cost-effective bank loan.
- Acquire distressed properties with upside potential that traditional lenders won’t touch.
- Poor financial history does not result in automatic loan denial.
Unlock Value-Add Potential
- Finance improvements and value-adds to boost occupancy and net operating income.Capitalize on distressed, transitional, or off-market properties.Ideal for renovations, lease-ups, or repositioning.
Multifamily Bridge Lender in California
Crescent Lenders is a top-rated multifamily bridge lender serving all of California. For over a decade, we have provided real estate investors from San Diego to San Francisco with the quick short-term financing they need.
Timing can make or break a deal. When traditional lending institutions can’t provide, look to Crescent Lenders for fast funding, providing the flexibility and support you need.
We move fast when banks don’t!
Handpicked Resources
Bridge Loans Guide Bridge Loans
How Long Does It Take? Bridge Loans
Bridge Loans for Real Estate Investors Bridge Loans
Bridge Loan Rates & Fees Areas Served
Los Angeles Bridge Loans Areas Served
San Diego Bridge Loans
About the Author
Russell Barneson Hard Money Lending
Russell is a seasoned real estate investor, writer, and hard money lending strategist, as well as the co-founder of Crescent Lenders. He holds a degree from the University of Southern California’s Marshall School of Business. Outside of work, Russell enjoys surfing and spending time outdoors with his dog, Amy.