Bridge Financing for San Francisco Bay Area Real Estate

A bridge loan carries a property from where it is today to where a long-term lender or a buyer will take over. In the Bay Area, that gap is often created by things a bank scorecard handles poorly: layered ownership, permits and entitlements that take time, and mixed-use or multifamily buildings that are not yet stabilized.

We are a licensed California private money broker based in Torrance and we lend across California, including the Bay Area. Here is how bridge financing generally fits these situations and what to prepare.

Why Bay Area deals often need a bridge

We are not going to quote local market statistics, but the structural reasons are familiar to anyone who has worked on these deals:

• Complex ownership. Properties held by trusts, partnerships, several family members or multiple entities can be slow to fit a conventional file.
• Entitlement and permit timelines. Approvals can take longer than a purchase contract or an existing loan maturity allows.
• Mixed-use buildings. A ground-floor commercial space with residential units above may not match a lender's single-use guidelines.
• Multifamily in transition. Rent rolls, vacancy and planned improvements may not yet support long-term debt.
• Maturing loans. A loan comes due before the refinance is ready.

How a bridge fits

The idea is simple: use short-term financing, underwritten on the property's equity and your plan, to cover the period until the situation resolves. The key is that the resolution must be specific (see exit strategies for a bridge loan). "We will refinance later" is not an exit. "The permit is expected on a stated timeline, work follows, and the stabilized property refinances into long-term debt" is closer.

Complex ownership and title

Where several parties or entities hold title, the lender needs to understand the structure early: who the borrower is, who has authority to sign, and whether there are existing liens or other claims. Gather organizational documents, trust information and a clear chart of ownership. Review of title is part of our process, and issues found there can affect timing, so surface anything you know about at the start. Our documents page outlines what we commonly request.

Permits, entitlements and construction

If the plan involves permits or entitlements, tell us where the process stands and what remains. A lender will want to understand the realistic schedule, because the loan term has to accommodate it with room to spare. If the project moves into rehab or ground-up work, our construction loans can fund up to 90% of construction cost, with loan amounts to $75 million, and can convert to a permanent loan at conventional rates on completion. See how bridge-to-permanent conversion works.

Mixed-use and multifamily

For apartment and mixed-use properties, we underwrite on in-place and projected net operating income, occupancy and unit mix. Describe the current rent roll honestly, including vacancies, and lay out the improvements and how they change income. Our apartment loan program covers bridge and value-add situations, and this article on value-add repositioning walks through the mechanics.

On rent-controlled or otherwise regulated units, we can only speak in general terms: rules that limit how rents can change affect the income projection, so the projection should be realistic and consistent with the rules that apply to the property. Check specifics with your attorney.

What to bring

1. A short summary of the property, the plan and the loan amount sought.
2. The ownership structure and signers.
3. Current rent roll and income and expense information, if the property is income-producing.
4. Permit and entitlement status, with dates.
5. Your exit and a realistic timeline, plus what you will do if it slips.

Timing and costs

We can offer approval in as little as 24 hours and funding in as little as seven days, subject to a complete file, underwriting, title review and property valuation. Complex ownership and permit-dependent deals commonly take longer, and approval is not guaranteed.

Bridge loans generally cost more than conventional financing and are short term. Weigh the total cost over your expected holding period against what the loan makes possible, and ask for every cost in writing.

This article is general information only, not legal, tax or investment advice.

Working on a Bay Area property? Call us at (800) 943-1314 or apply online and we will give you a straight read on fit.