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Commercial Rehab Bridge Loans for Value-Add CRE
By Jaken Finance Group · Principal, Jaken Finance Group
Commercial rehab bridge loans for value-add CRE — LTC vs LTV, milestone draws, bridge-to-perm exits, and 8.99%–13.5% IO carry across asset classes.
Investors pursuing commercial rehab loans and value-add CRE financing need one framework: LTC on the way in, LTV on the way out. Bridge capital funds acquisition speed and renovation holdbacks while permanent lenders wait for trailing NOI.
This July 2026 refresh covers milestone draw cadence, 8.99%–13.5% interest-only carry, asset-class CapEx scope, and bridge-to-perm exits — the same logic as MHP and RV park bridge, applied across retail, industrial, hotel, office, and multifamily.
Hub: commercial property loans by asset class · bridge loans
Value-add vs stabilized acquisition
Banks price stabilized cash flow. Bridge lenders price execution on a business plan. That distinction drives every lever on a value-add file.
| Stabilized | Value-add / rehab | |
|---|---|---|
| Underwriting | T-12 NOI | Business plan + pro forma |
| Leverage | LTV on appraised value | LTC on cost stack |
| Timeline | Close and hold | 12–24 month reposition |
| Risk | Market / tenant credit | Execution + lease-up |
A 62% occupied strip with deferred TI fails bank credit boxes — not because the asset is weak, but because there is no trailing income to size permanent debt. Name the exit lender class before Draw 1.
LTC vs LTV — worked example
Sizing bridge to cost and exit to stabilized value prevents the equity call that kills otherwise workable deals.
Strip center acquisition + tenant improvements:
| Line | Amount |
|---|---|
| Purchase | $1,200,000 |
| TI / CapEx | $280,000 |
| Total cost (LTC basis) | $1,480,000 |
| Bridge at 68% LTC | $1,006,400 |
| Stabilized value (18 mo) | $1,750,000 |
| Refi at 70% LTV | $1,225,000 — pays off bridge + returns equity |
Permanent refi proceeds size against $1.75M stabilized value, not the $1.48M cost stack. Mixing metrics creates a $200K+ equity gap at refi when the bank quotes 70% LTV on appraised value while the bridge was sized at 68% LTC on purchase plus TI.
Run both numbers in the commercial property calculator before LOI. If refi proceeds at target LTV do not clear bridge payoff plus sponsor equity return, adjust purchase price, TI scope, or hold period.
Draw schedule — how CapEx releases
Commercial rehab draws mirror fix-and-flip draw mechanics but scope to tenant improvements, building systems, and common-area work — not residential ARV milestones alone.
| Draw | Trigger | Typical % of holdback |
|---|---|---|
| Draw 1 | Lease executed + TI start | 25%–30% |
| Draw 2 | Midpoint inspection | 30%–40% |
| Draw 3 | Substantial completion | Balance |
| Final | CO / tenant open | Retainage release |
Retainage — usually 10% — stays in escrow until CO or tenant opening. Match draws to asset-specific gates (hotel PIP, industrial docks, MHP pads), not a residential template. Front-loaded structures strand capital on 8.99%–13.5% IO when permits or lease-up slip.
Asset-class rehab scope
CapEx intensity and permanent exit channels vary by asset class. Use the spoke pages for scope detail; this hub covers the financing logic.
| Asset class | Common CapEx | Spoke page |
|---|---|---|
| Hotel / motel | PIP, FF&E | Hotel financing |
| Industrial | Dock, clear height, roof | Industrial loans |
| Retail | TI, facade, parking | Retail strip center |
| Self-storage | C&S conversion | Self-storage |
| MHP | Pad fill, utilities | MHP financing |
| RV park | PIP, pad electric | RV park financing |
Multifamily value-add exits through agency or CMBS at 80%+ occupancy and 1.25x T-12 DSCR. Owner-occupied assets may bridge first, then exit via SBA 504 or 7(a) — see bridge now, SBA later.
Bridge-to-perm exit paths
Bridge is interim capital. Permanent debt replaces it when the asset crosses stabilization thresholds.
| Asset | Permanent exit |
|---|---|
| Multifamily 5+ | Agency (Fannie/Freddie), CMBS |
| Retail / office | CMBS, community bank |
| Industrial | Bank, CMBS |
| Hotel | CMBS, bank |
| Owner-occupied | SBA 504 / 7(a) |
| MHP | Agency MHC, community bank |
| RV park | SBA 7(a), bank |
| Non-owner-occupied hold | DSCR at 5.75%–10.5%, 1.0+ ratio |
Agency and bank exits require trailing 12-month NOI at 1.25x DSCR. DSCR permanent loans at 5.75%–10.5% size on in-place rent when the asset stabilizes before agency qualification. Wait for 80%+ occupancy sustained 90+ days — pro forma alone triggers refi declines.
When bridge rehab beats bank renovation
| Signal | Bridge | Bank |
|---|---|---|
| Occupancy under 70% | Yes — underwrite to pro forma | No — needs T-12 NOI |
| Close in 30 days | Yes | Rarely |
| Heavy TI before lease-up | LTC on cost stack | Limited renovation appetite |
| Sponsor self-employed | Asset-based | Full personal financials |
| Stabilized 85%+ occ | Overpaying on rate | Bank wins |
Bridge pricing reflects speed, execution risk, and a defined exit — not permanent debt service on day-one NOI. Once occupancy stabilizes, shop permanent channels; staying on 8.99%–13.5% IO past that point erodes equity.
Common value-add mistakes
| Mistake | What happens | Prevention |
|---|---|---|
| Refi too early | Permanent lender declines — needs T-12 | Wait for 80%+ occ and 1.25x DSCR on trailing NOI |
| Under-budgeting TI | Bridge extension at 11%–13% IO | Add 15%–20% TI contingency on retail/office |
| Mixing LTC and LTV | Surprise equity call at refi | Size bridge to cost; exit to stabilized value |
| Skipping debt-service reserve | Extension denied when lease-up slips | Budget 3–6 months PITIA in loan structure |
| Ignoring asset CapEx milestones | Draw delays on hotel PIP, MHP pads | Match draw schedule to asset-specific scope |
Budget 2–4 months interest reserves on heavy scope — IO accrues on the acquisition advance before first TI draw releases.
Sponsor profile — who bridge rehab fits
| Sponsor | Typical deal | Bridge advantage | Permanent exit |
|---|---|---|---|
| First-time value-add buyer | Sub-$2M strip with vacancy | Underwrites to pro forma | CMBS or bank at stabilization |
| Self-employed operator | Owner-occupied warehouse + TI | Asset-based underwriting | SBA 504 after 24-month occupancy |
| Experienced syndicator | 60% occupied multifamily | 30-day close on off-market | Agency refi at 80%+ occ |
| MHP/RV operator | Turnaround park 65% occ | Bridge on projected NOI | Agency MHC or bank at 80%+ |
| Hotel reflag | Independent → flagged PIP | LTC on FF&E + PIP scope | CMBS once ADR stabilizes |
Worked example — hold vs flip on the same strip center
Using the $1.48M cost stack above: bridge at 10.5% IO on an average outstanding balance of ~$950K costs roughly $100K/year — about $150K total IO over an 18-month reposition if draws release on schedule.
| Rate | $950K avg balance × 18 mo |
|---|---|
| 8.99% | ~$128K IO |
| 10.5% | ~$150K IO |
| 13.5% | ~$192K IO |
Plan A — Flip: Sell at $1.75M — model net after IO, commissions, and ~8% sale costs.
Plan B — DSCR hold: Refi at 70% LTV / 7.25% (~$89K DS) requires 1.25x on T-12. DSCR loans at 5.75%–10.5% fit holds when in-place rent clears 1.0+ at target LTV. Run both exits before signing the bridge term sheet.
Jaken Finance Group commercial bridge terms
| Parameter | Range |
|---|---|
| Rates | 8.99%–13.5% IO |
| LTC / LTV | 65%–75% — varies by asset |
| Term | 12–24 months |
| Close | 14–30 business days on qualified files |
| Coverage | All 50 states |
Bridge files underwrite exit path, scope, and sold comps alongside LTC math. Submit purchase contract, CapEx budget, rent roll, entity docs, and liquidity in one pass.
Commercial property calculator · Get approved · Submit scenario
Bottom line
Size bridge to cost, release draws on asset-specific milestones, and name the permanent exit before close. 8.99%–13.5% IO buys the calendar — TI budget, lease-up, and refi timing determine whether it ends in equity return or extension.
Commercial Rehab Bridge Loans for Value-Add CRE — next step (2026)
Model flip spread after ~8% sale costs and DSCR at 1.0+ before you lock scope — dual-exit files survive 2026 carry pressure.
Submit scenario · Pre-qualify · (833) 264-7776.
Rates, terms and conditions offered only to qualified borrowers and are subject to change at any time without notice. Closing times are in business days and commence upon receipt of appraisal payment and satisfaction of borrower conditions. Closing times may be delayed due to appraiser property access . All loans are subject to full underwriting for loan approvals. Jaken Finance Group only finances non-owner occupied investment properties.
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Jaken Finance Group, 2300 Barrington Road, Suite 400, Hoffman Estates, IL 60196