Bridge loans can be a great tool for investors when it comes to commercial apartment properties, which are more popular than they have ever been before
There’s no denying the fact that Americans are loving apartment living. Especially in housing markets with sky-high home prices, high-quality apartments have become a hot commodity, and people are willing to pay for it.
The demand for apartments is booming and it’s never been a better time to own an apartment building, according to a recent blog post by Kennedy Funding Financial, a direct, private lender specializing in commercial bridge loans for a number of purposes. Intensified by the tight supply in the housing market and elevated home prices, potential buyers are seeking alternatives to home options. Rock-bottom interest rates are also stoking the fires of demand, which is pushing home prices up even more. This, alone with increased competition from investors, is putting homebuying out of reach for many individuals and families across the nation, creating more need for apartment rentals.
Even though 2018 saw an average increase of 4.6% in rent prices, renters are staying longer or renewing their leases consistently. Tenants are paying more while newly constructed units are being rented out faster than ever. The rate at which new apartment units are rented out is at a three-year high, according to a recent report by the U.S. Census Bureau.
This rate of apartment absorption is good news for landlords because it is directly driving up the price of apartments. “If you’re considering developing or rehabilitating an apartment complex, the market is on your side,” according to Kennedy Funding. It presents a unique opportunity that could prove to be a profitable venture.
Are you ready to enter the apartment market? As a landlord, you have two options. The first is to acquire the existing complex. The second is to develop a new complex.
But what is the best way to finance this type of investment? Whether you are acquiring an existing property or entering into a new development, you need capital. Short-term flexible funding options help to finance what you need without the challenges of working with a conventional lender.
“Speed is a key element of capitalizing on a thriving market, so when you can’t afford to wait for the banks to come through, look to a direct private lender for a commercial bridge loan,” according to Kennedy Funding. “A commercial bridge loan can help you get your project started or finalize your acquisition quickly, enabling you to act while the market remains hot.”
Commercial bridge loans can help by allowing you to add value to an aged property by redeveloping and bringing it into modern times can create a great opportunity to turn a profit. A direct private lender can help investors move fast in support of their vision, rapid approval, guidance, flexible terms and rapid approval, some areas where traditional lenders aren’t equipped to assist.
“Commercial bridge loans can be turned around quickly and applied to a variety of projects,” said Kevin Wolfer, CEO of Kennedy Funding. “In the case of our nation’s apartment stock, acting quickly is key to capitalize on this lucrative opportunity. Commercial bridge loans are the right fit for many looking to capitalize on this opportunity.”
You can also use a commercial bridge loan for the development of a new complex. If you’re starting from scratch, you will need materials, labor, professional services, zoning and planning board applications, and permits to get the project going. Getting the capital you need for crucial services in a timely manner is essential to your success. A commercial bridge loan is also ideal for funding on raw land acquisition if you choose to build from the ground up.
Direct private lenders that provide commercial bridge loans offer an significant advantage over conventional lenders: They're faster and have the power to fund projects banks won’t. This is because the funding comes from a direct source, allowing lenders to recognize potential and provide support accordingly.
The key here is risk: real value is created when you take a risk. Private lenders have the ability and interest in investing in promising projects even if there is a risk. The reward is what matters for you and your lender.
