Increasing Significance of Bridge Loans
An attractive property at an affordable price – this is what every real estate investor looks for, but only a few actually find. Due to pressure to invest and the negative interest rate environment, real estate investors have to content themselves with ever lower returns. However, someone looking for a good return has to seek out alternatives to offering the highest price. Other factors such as speed, transaction security and discretion are important when successfully bidding to purchase a property. Bridge loans allow investors to act quickly, and thus to gain an advantage when competing for attractive properties.
As a result, bridge loans are more important than ever, and are being used by professional real estate investors with increasing frequency to complement their financing structure. At the same time, traditional lenders are becoming more cautious and risk-averse, resulting in longer processing times for loan applications. As a result of this, the small number of potential lenders are confronted with high and steadily rising demand.
Optimal Financing As the Goal
A bridge loan also gains time for a real estate investor to put in place an optimal financing structure. As there is no time pressure, offers can be obtained from various lenders and compared with one another, making it possible to negotiate the most favourable financing terms. The savings that can be achieved by securing optimal terms for long-term financing make up for the costs of the bridge loan, in most cases by far.
Short-Term Liquidity Squeezes
It does not make any sense for real estate investors to hold large liquidity reserves, especially during times of negative interest rates. However, if an opportunity arises to increase the portfolio size at short notice, or if one property has to be sold to finance another, often sufficient liquidity is not available over the short-term in order to act quickly. Bridge loans offer the optimal solution to these short-term liquidity squeezes.
The Right Partner for Bridge Loans
Setting up a bridge loan requires lean processes, a highly practical approach and a deep knowledge of real estate in order to be able to secure swift, smooth and professional implementation. In Switzerland, only a few financing partners have these characteristics and can bring the necessary liquidity to the table. Due to their frequently protracted credit decision making processes, traditional lenders such as banks, insurers and pension funds are in most cases not geared towards acting urgently.
Property One brings together under one single roof a long-standing, thorough knowledge of the market, comprehensive real estate expertise and financing know-how. The ONE Real Estate Debt Fund of Property One was launched in order to offer borrowers alternative, professional access to financing.