#23 — BRIDGE LOANS Buyer Checklist You Need To Know Before You Spend Your Money. 50 Buyer-Beware Intelligence Points.

• Bridge financing is temporary by design.
• The exit strategy is therefore critical.
• Refinancing is not guaranteed.
• Property values can change before the bridge matures. Interest rates can change.
• Loan extensions may be expensive.
• Exit delays can dramatically increase total cost.
• Fees can be overlooked when focusing on speed.
• Appraisal assumptions may prove optimistic.
• Construction delays can extend the loan.
• Permitting delays can destroy the timeline.
• A pending sale may fail. A buyer’s financing may collapse.
• The lender may require substantial reserves.
• Personal guarantees can increase exposure.
• Cross-collateralization can create additional risk.
• Prepayment provisions can matter.
• Default provisions need careful review.
• The cheapest bridge may not have the safest structure.
• The borrower can become trapped between two financing events.
• A delayed exit can turn a profitable project into an expensive one.
• “Guaranteed refinance” should be treated cautiously.
• The exit lender may apply different valuation standards.
• You need a backup plan before the bridge begins.
• A bridge loan should be evaluated primarily by the strength of the bridge’s exit.

Premium Checklist

Purpose

☐ I can explain precisely why bridge financing is necessary.

☐ I know what event will repay the loan.

☐ I have documented the expected repayment date.

Cost

☐ Principal verified.

☐ Interest rate verified.

☐ Points verified.

☐ Origination fees verified.

☐ Legal/document fees verified.

☐ Extension fees verified.

☐ Exit costs verified.

Timeline

☐ Best-case timeline calculated.

☐ Expected timeline calculated.

☐ Conservative timeline calculated.

☐ Delay scenario calculated.

☐ Monthly carrying cost calculated.

Exit

☐ Sale strategy documented.

☐ Refinance strategy documented.

☐ Backup exit documented.

☐ Exit valuation independently tested.

☐ Required refinancing conditions identified.

Stress Test

☐ Exit delayed 3 months.

☐ Exit delayed 6 months.

☐ Exit delayed 12 months.

☐ Property value falls 10%.

☐ Property value falls 20%.

☐ Refinancing becomes more expensive.

Final Question

“What happens if the event that is supposed to repay this loan doesn’t happen on schedule?”

If you don’t have a financially survivable answer, the bridge may be carrying you toward a cliff rather than across one.