RE bridge loan exit ops?

Not much to add here. Just, curious what exit opps would look like from a RE finance shop specializing in short term bridge loans would look like. I'd imagine fairly thorough property level analysis is needed considering said properties are taken over if a loan goes bad. Also seems like great exposure to transactional/ capital/ underwriting/ valuation experience. For these reasons, I feel like acquisitions would be a relatively fluid exit op? Perhaps also RE capital markets? Perhaps I'm completely wrong (leaning towards this)? Please advise.

*If you couldn't tell by now, this is regarding RE bridge loans, not VC or CF

 

I would say that you would probably pick up some valuable skill-sets. Your exposure will be more finance heavy than real estate heavy, which isn't necessarily a good or bad thing.

Exit opps - hard to say, but you should be well-prepared for both acquisitions and RE capital mkts.

Man made money, money never made the man
 
GoldmanBallSachs:
Thanks RECM. Just wasn't sure if experience at these bridge loan type shops would be unfavorably looked upon since they seem kind of "loan sharkey" compared to the more conventional financing avenues.
In my opinion, there's a lot of value in working on loan sharkey deals, because it means you are working on riskier, more entrepreneurial deals. It's harder for me to get excited about underwriting a 10-year loan on a building that's leased through 2030 to a AAA-rated tenant. Others might disagree, but personally if I were a lender, I'd have a lot more fun doing bridge loans, construction loans, etc than permanent mortgages. Just my two cents.
 
Best Response
prospie:
GoldmanBallSachs:
Thanks RECM. Just wasn't sure if experience at these bridge loan type shops would be unfavorably looked upon since they seem kind of "loan sharkey" compared to the more conventional financing avenues.
In my opinion, there's a lot of value in working on loan sharkey deals, because it means you are working on riskier, more entrepreneurial deals. It's harder for me to get excited about underwriting a 10-year loan on a building that's leased through 2030 to a AAA-rated tenant. Others might disagree, but personally if I were a lender, I'd have a lot more fun doing bridge loans, construction loans, etc than permanent mortgages. Just my two cents.

Prospie - you do have to remember that permanent financing doesn't always assume low risk. The bread and butter of CMBS are deals that are stabilized, but by no means pristine. The riskier the deal, the higher the pricing (and return once sold). The deals leased through 2030 located in 24/7 cities with AAA rated tenants all go to life cos. For CMBS you are generally looking at something with near term roll, a risky major tenant, a tertiary market, and possibly all of the above. You may not be doing opportunistic deals, but not all permanent loans are "slam dunks." But I digress...

GBS - don't know much about bridge loan exit opps as I haven't met anyone who focused on them exclusively. I think it would depend on the volume you saw. Agree with Prospie that you might see some unique/riskier situations that could be interesting. I'd encourage you to check out the profiles of people at various firms you would like to work and see if bridge loan experience shows up in their bio.

 

Hard Money is a very wide arena with pricing all over the place. I'm seeing 7% - 10% I/O with 1 - 3pts to the house. Whether it's "bridge" or "hard" you're pretty much doing the same thing. I have noticed many more banks beginning to offer quasi bridge financing. No bank likes the reserve requirements for land loans on their books these days. So now it's "bridge" lol.

As far as exit ops, hmmm. The position certainly has you in the business. The question is does this fund do more of the $1mil and up entitled land/value add/opportunistic stuff or are they doing SFR rehab deals (high yield). I know several private and publicly traded private money firms in SoCal. One is a bond company and is well known. I'm sure working for a shop like them your exit ops would be far greater than a privately owned SFR fund out of Riverside.

Despite a private lender saying they have no Max loan amount, the trenches of private commercial lending are still $1mil to about $10mil. Been that way for years.

 

"Forget the sterotype and focus on what you do, high risk high reward underwriting. It's only "loan sharkey" in real estate."

Unfortunately, that is exactly the type of hard money lending I'm refering to, lol. It does, however, seem like it has a fine image from what I've taken from here (correct me if I'm wrong).

GBS
 

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