Rent Growth Is Fostering Big Demand for Bridge Loans

Value-add apartment investors are back in action, and they are driving a boom in the bridge lending market. It’s all thanks to the great migration during the pandemic. As people traded urban living for secondary markets, including tech hubs, apartment rents in small metros and suburban markets climbed to record heights—and the trend hasn’t stopped in 2021.

“Rent growth has supported transitional business plans where sponsors are buying properties with the idea of investing additional capital into those properties or executing a rental increase plan,” Alex Cohen, CEO of Liberty SBF, tells GlobeSt.com. “We are seeing a lot of bridge demand from borrowers that are executing on those types of business plans.”

In the current market, value-add business plans are most viable for mid-tier investors focused on properties in the $5 million to $25 million price range and located in cities with strong rent growth. “We tend to finance what we call emerging institutional sponsors,” says Cohen. “Those are middle market investors that have 10 to 15 projects under their belt.”

Join your host Sean Reynolds, owner of Summit Properties NW, and Reynolds & Kline Appraisal as he takes a look at this developing topic.

https://www.globest.com/2021/10/25/rent-growth-is-fostering-big-demand-for-bridge-loans/?slreturn=20211003002225

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