The Low-Interest Bridge Loan Dilemma: A Financial TightropePosted by Tim Bray on
Commercial real estate projects can be a lucrative investment opportunity for those who are willing to take on the associated risks. While financing options for these projects vary, bridge loans are often used to cover the gap between the initial investment and the eventual long-term financing. However, recent trends in the market have shown a rise in bridge loans with radically lower interest rates than the current rate. This may seem like an excellent opportunity to save on interest costs, but it poses significant risks to investors and lenders alike.
First, it's essential to understand what a bridge loan is. A bridge loan is a short-term loan used to finance the gap between the purchase of a property and long-term financing. Typically, these…
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