12
Just realized bridge loans aren't always a scam
Ngl, I used to think bridge loans were just a way for lenders to trap you in high fees. But after talking to a guy in Atlanta who used one to close on a 12-unit deal in 10 days, I changed my mind. He showed me his numbers - the 2.5% origination fee was worth it to lock the property before someone else grabbed it. Anyone else had good or bad experiences with these short-term fixes?
2 comments
Log in to join the discussion
Log In2 Comments
the_faith3d ago
My cousin in Dallas took out a bridge loan on a rundown quadplex last year and it worked out okay for him. He paid 2.8 points and closed in 8 days on a property that had two other offers. But @noran21's story about the exit loan falling through is exactly what scares me - my cousin almost got stuck too because his refinance took 3 weeks longer than expected. He ended up having to rent out two units at a discount just to cover the interest payments for that extra month. The property next door sold for 50k more six months later though, so he lucked out in the end.
8
Bridge loans are a tool, that's it. Had a buddy in Phoenix use one to grab a duplex before the market went nuts. Paid 3 points upfront, but he flipped it six months later for a 40k profit. Almost got burned though - his exit loan fell through and he had to beg family for cash. Close call. Seen plenty of people get crushed by them too, especially when rates jump.
5