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Hard Money and Bridge Loans to Fund and Flip Property
By Jason Taken · Principal, Jaken Finance Group
Hard money vs bridge for flips — when 8.99%–13.5% IO acquisition-rehab fits vs gap financing between sale and purchase on non-owner-occupied deals.
Investors searching for hard money and bridge loans often find overlapping definitions — both describe short-term, collateral-first debt on non-owner-occupied real estate. In practice, hard money usually means acquisition + rehab funding for a value-add flip; bridge often means gap financing between two transactions — buying the next asset before the current one sells. Jaken Finance Group underwrites qualified investment-property bridge files at 8.99%–13.5% interest-only. This guide separates the use cases, shows when each structure funds a flip, and maps exit math before LOI.
Hard money vs bridge — how investors use the terms
| Term | Typical investor meaning | Collateral focus | Common exit |
|---|---|---|---|
| Hard money | Flip / value-add acquisition + rehab | Subject property ARV + LTC | Resale or DSCR refi |
| Bridge loan | Timing gap between buy and sell | One or two properties | Sale of departing asset |
| Fix-and-flip bridge | Combined purchase + holdback | Subject SFR / small MF | Resale within 6–12 mo |
What is hard money · Bridge loans for investors · Fix and flip requirements.
Many lenders — including Jaken Finance Group — use bridge as the product name and hard money as the colloquial label. Underwriting is the same: sold comps, scope, entity, exit. Rate band is 8.99%–13.5% IO regardless of which term appears on the term sheet.
When hard money funds the flip
The classic flip path: acquire distressed non-owner-occupied SFR or small multifamily, rehab, sell within 4–9 months. Hard money (bridge) covers:
- Purchase — often up to ~90% LTC capped at ~70%–75% ARV
- Rehab holdback — released on inspection milestones
- Carry — IO at 8.99%–13.5% until sale
Banks rarely fund heavy rehab on distressed collateral because as-is value does not support leverage and condition requirements block close. Hard money sizes on ARV from sold comps and scope with 10%–15% contingency.
Using hard money to invest · Fix and flip calculator.
When a bridge loan fills a timing gap
Bridge structures shine when liquidity is trapped in an asset you are selling:
Scenario: You own Property A under contract to sell in 45 days. Property B — an off-market flip — requires close in 14 days. A bridge loan on Property B (or cross-collateral on A + B where permitted) funds the acquisition while A’s sale generates payoff cash.
| Factor | Flip hard money | Transactional bridge |
|---|---|---|
| Primary need | Rehab + resale spread | Close timing |
| Holdback | Yes — draw schedule | Sometimes minimal rehab |
| Cross-collateral | Subject only typical | May include departing asset |
| Exit | ARV sale | Sale of Property A |
Understand release terms if two properties secure one note — payoff on the departing asset should trigger partial release on the remaining collateral.
Combined structure — bridge that behaves like a flip loan
Most Jaken Finance Group flip files are bridge notes in legal documentation: 6–18 month term, IO, collateral on the subject investment property. The “bridge” spans from acquisition to resale (or DSCR refi at 5.75%–10.5%).
Product features that matter on the term sheet:
| Feature | Why it matters |
|---|---|
| LTC / ARV caps | Determines cash to close |
| Draw schedule | Matches GC payment rhythm |
| Extension options | Fee + max months if sale slips |
| Prepayment | Flip exits early — confirm no penalty |
| Entity vesting | LLC required on most files |
Checklist for evaluating hard money proposals · Hard money application process.
Worked example — acquisition-rehab bridge
Assumptions: $175,000 purchase + $40,000 rehab = $215,000 all-in. ARV $280,000. 90% LTC → $193,500 note at 10.25% IO ≈ $1,653/mo during 5-month hold ≈ $8,265 carry.
| Line | Amount |
|---|---|
| ARV | $280,000 |
| Sale costs (~8%) | −$22,400 |
| Net sale | $257,600 |
| All-in basis | −$215,000 |
| Carry + closing (approx.) | −$11,500 |
| Spread (pre-tax) | ~$31,100 |
Cash to close ≈ $21,500 (all-in minus note) plus origination and third-party costs. Preserving two months IO reserve (~$3,300) avoids draw delays when inspections slip a week.
Stress ARV −10% and +1 month carry — at $252K ARV, net after 8% costs ≈ $231,840, spread falls to roughly $5,340 before tax. That margin still works; at −15% ARV the deal turns marginal fast.
Worked example — buy-before-sell bridge
Assumptions: Property A under contract at $320,000 sale, closing in 60 days. Property B purchase $210,000 — light cosmetic rehab $15,000, ARV $265,000. Bridge on B: 85% of $225K all-in = $191,250 at 11.5% IO ≈ $1,833/mo.
| Month | Event | Bridge balance |
|---|---|---|
| 0 | Close Property B | $191,250 |
| 2 | Complete rehab | $191,250 |
| 2.5 | List B | IO accruing |
| 3 | Close Property A | Paydown from A proceeds |
| 5 | Sell Property B | Payoff bridge + profit |
Total IO ≈ 5 months × $1,833 = $9,165 across both carry windows. Model Property A sale delay (+30 days) before you cross-collateral — each idle month burns spread.
Hard money / bridge vs bank — flip funding comparison
| Factor | Hard money / bridge | Bank investment |
|---|---|---|
| Rate | 8.99%–13.5% IO | Lower, amortizing |
| Close | 7–14 business days | 30–45+ days |
| Rehab draws | Milestone releases | Uncommon on distressed |
| Sizing | ARV + LTC | As-is + DTI |
| Property | Non-owner-occupied only | Varies |
DSCR vs hard money vs conventional · DSCR hub.
Exit paths — sale, refi, or portfolio sale
Every bridge file needs a written exit at submission:
| Exit | Best for | Permanent product |
|---|---|---|
| Resale | Classic flip | N/A — payoff from proceeds |
| DSCR refi | BRRRR / hold | 5.75%–10.5% at DSCR ≥1.0 |
| Sale of other asset | Timing bridge | Paydown from liquidity event |
Hard money buy-and-hold strategy · Scale rental portfolio with DSCR.
Confirm seasoning (6–12 months from note date on many DSCR programs) before you rely on refi exit. Bridge without sale or refi path becomes indefinite high-IO carry.
File package — before term sheet
| Document | Purpose |
|---|---|
| Purchase contract(s) | Timeline and price |
| Sold comps (3+) | ARV / value support |
| Scope + bids | LTC and draw schedule |
| Entity docs | LLC OA, EIN, good standing |
| Exit letter / pro forma | Sale or DSCR path |
| Insurance quote | Investor/landlord coverage |
| Departing asset contract (if bridge) | Paydown source |
For buy-before-sell bridges, include Property A sale contract and net proceeds estimate so underwriting sees payoff capacity beyond the flip ARV alone.
Draw mechanics on rehab bridges
Rehab holdbacks release on documented milestones — not verbal GC updates:
| Milestone | Typical tranche |
|---|---|
| Closing | Purchase + initial holdback deposit |
| Rough-in / mechanical | Per approved scope line items |
| Drywall / finishes | Subsequent inspections |
| CO / final | Remaining holdback |
Plan 3–5 business days per draw. See fix and flip draw process. Submit requests 48 hours before milestone completion to keep GCs paid on schedule.
Risks to model honestly
- IO carry — 8.99%–13.5% accrues monthly; delays on either leg of a buy-before-sell bridge compound cost
- ARV miss — size exit on conservative sold comps, not active list prices
- Scope overrun — 10%–15% contingency is mandatory in underwritten files
- Cross-collateral trap — one delayed sale can block release on the other asset
- Extension cost — pre-negotiate max term and fee at origination
Hard money loan mistakes to avoid · Hard money loan statistics 2026.
When bridge / hard money is the wrong tool
- Stabilized leased asset — use DSCR at 5.75%–10.5%, not bridge
- Owner-occupied purchase — Jaken Finance Group finances non-owner-occupied investment property only
- No exit documented — bridge without payoff source is high-IO indefinite carry
- Thin spread after 8% sale costs — pass or renegotiate purchase basis
Related resources
- Benefits of hard money for flipping
- Master fix and flip financing guide
- Fix and flip statistics 2026
- Submit scenario · Pre-qualify
Hard Money and Bridge Loans to Fund and Flip Property — next step (2026)
Bridge 8.99%–13.5% IO works when sold comps, scope contingency, and resale timeline are in the file at LOI — not ARV alone.
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