Commercial real estate investing can be lucrative, but securing full funding for a project often presents a major challenge. Even when you've been approved for a mortgage, there may still be additional costs like the down payment, closing costs, renovation expenses, or holding costs aren't usually covered. That's where gap funding can help.
These short-term loans are designed to "fill the gap" between your primary financing and the total amount needed for a commercial real estate deal. Gap funding generally accounts for 10-15% of the total loan amount and is structured as a short-term loan, meant to be repaid within a few months to a few years. Interest rates on gap loans can range from 7% to 17%.
You can also utilize your own home's equity as gap funding. If you own an investment property or even your primary residence, borrowing against your home's equity can sometimes be a more stable option.
It's important to go over all of the tools and opportunities with a trusted professional. Each investment is different, and there is no one right fit for every situation. EMS Commercial has more than 30 years of experience providing financing for multiple investment types, including residential, commercial multi-unit, and mixed-use properties.
