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The Difference Between Agency Debt and Bridge Debt! Tips for Financing Multifamily Real Estate Deals


meet Kate Kate is looking to finance a
multi-family property but is confused on the different types of loans kate is
told by his partner matt that there are two types of loans agency loans and
bridge loans matt explains that agency loans are highly regulated longer-term
loans backed up by a government agency agencies guarantee that the principal
amount of the loan will be repaid which allows syndicators to generally receive
a lower interest rate with higher amounts of leverage matt explains that
in order to receive this loan the property must be stabilized meaning that
it must have had 90% occupancy for the past three months Kate asks what a
bridge loan would entail Matt explains that bridge loans are short-term loans
and would hold a higher interest rate generally for bridge loans syndicators
will receive a faster application approval and funding timeline than he
would for agency loans bridge loans would also not require the asset to be
stabilized Matt describes that overall bridge loans are more risky than agency
loans due to the fact that bridge loans are short-term and before the end of the
loans term this indicator must refinance or sell the property kate now
understands the differences between bridge and agency loans and is more
equipped to make financing decisions on his multifamily property

Stephen Childs

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