A debt fund is a pool of capital that is used to finance commercial real estate projects. This type of fund is typically managed by a team of professionals who are responsible for sourcing, underwriting, funding, and servicing the loans.
Debt funds are an alternative to traditional commercial real estate financing, such as banks, credit unions and other lending institutions. They offer several benefits, including the ability to provide flexible, non-traditional financing options, the potential for higher returns, and the ability to invest in a diversified portfolio of properties.
These types of loans are typically used as a short-term (bridge) option to finance construction or renovations projects and give them time to stabilize. Once stabilized, debt fund loans are usually taken out via a sale or refinance from a permanent lender.
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