Updated
Scenario assumptions
| Location | Naperville, Illinois |
|---|---|
| Property type | Illustrative Naperville four-bedroom single-family rental |
| Loan type | Modeled hard money bridge → DSCR refinance |
| Loan amount | $369,000 hypothetical request (90% LTC on purchase plus rehab) |
Why a quick refinance can still need more cash
This Naperville BRRRR example is illustrative and is not a verified funded transaction. The model uses assumed costs and financing inputs to show how a single-family renovation might move into rental debt. No property address, appraisal, tenant lease, borrower experience, or actual refinance timetable is represented.
The assumptions are a $342,000 purchase, $68,000 renovation, $478,000 completed value, and $3,450 monthly rent. The key result is that the modeled permanent loan cannot fully repay the bridge. Rental coverage also limits the proposed exit. A short seasoning requirement, even when available for a particular file, would not solve those two issues.
The proposed bridge also exceeds the origination cap. A $369,000 request is 77.20% of the $478,000 assumed after-repair value. Under Jaken Finance Group’s published leverage policy, the lower of eligible LTC and 75% of value caps this example at $358,500 before other conditions. The $369,000 balance is retained below as an adverse arithmetic scenario, not available Jaken Finance Group financing. Sizing the acquisition bridge within the cap requires more initial equity and a revised carry calculation.
Use the Naperville hard money lending page for the acquisition process and the Chicago metro DSCR guide for rental financing. Every rate, fee, and leverage percentage below is an educational assumption rather than an available loan quote.
Purchase and construction funding
| Source or use | Assumed amount |
|---|---|
| Purchase price | $342,000 |
| Renovation budget | $68,000 |
| Purchase plus renovation cost | $410,000 |
| Bridge commitment: 90% × $410,000 | $369,000 |
| Rehab reserve included in the commitment | $68,000 |
| Bridge advance toward purchase | $301,000 |
| Investor acquisition equity | $41,000 |
This example defines LTC using purchase and renovation, without financing fees, closing costs, or carrying expenses. The renovation reserve is included in the $369,000 commitment. It is disbursed over construction rather than treated as additional acquisition cash. All of it is assumed used by the refinance date.
An assumed 12-month bridge is modeled for eight months through rehabilitation, lease-up, and refinancing. The model takes no credit for rental receipts during that period. The actual agreement determines when interest starts, whether it applies to undisbursed funds, and whether an extension is available.
Renovation allowances for the example
| Scope item | Assumed cost |
|---|---|
| Kitchen and primary bath remodel | $32,000 |
| Hall bath and main-level flooring | $14,500 |
| Roof replacement | $12,500 |
| HVAC and electrical allowance | $9,000 |
| Total | $68,000 |
The amounts are not contractor bids and contain no separate contingency line. A borrower using this model would need to add a contingency or identify a documented reserve within the contractor budget. The financing and cash totals below would then need to be recalculated. Finishes should be supported by comparable rentals, not an assumed premium for a corporate tenant or school district.
The City of Naperville permits and licenses page identifies permit categories and the city’s application portal. Confirm the actual work scope and required approvals before agreeing to a contractor schedule. This scenario does not claim that a roof job triggers a particular inspection sequence or that every renovation requires the same occupancy document.
Acquisition cash is only the starting point
At an illustrative 9.85% annual rate, eight months of interest on the full $369,000 commitment equals $24,231. This deliberately conservative calculation does not assume a lower average drawn balance. Interest is paid from cash and is not capitalized into the bridge principal.
| Investor cash use | Assumed amount |
|---|---|
| Acquisition equity | $41,000 |
| Origination allowance: 2% of commitment | $7,380 |
| Purchase closing and draw-fee allowance | $6,500 |
| Eight months of interest | $24,231 |
| Eight months of taxes: $850/month | $6,800 |
| Eight months of insurance: $180/month | $1,440 |
| Eight months of utilities and upkeep: $150/month | $1,200 |
| Cash used before refinance | $88,551 |
The initial equity, points, and purchase-cost subtotal is $54,880. That figure leaves out $33,671 of modeled interest and property carry. Draw reimbursement timing may require extra temporary working cash. The table also excludes added contingency, lender reserve requirements, construction overruns, and extension charges, so it should not be read as a maximum liquidity requirement.
Taxes and insurance are assumptions, not a quoted Naperville market average. Check the actual parcel, county, tax bill, exemption treatment, and insurer’s renovation coverage. The Will County Supervisor of Assessments provides assessment and exemption information for properties in that county and directs tax-bill questions to the Treasurer. Confirm the subject property’s jurisdiction before choosing the records to use.
Reconcile the refinance before describing cash-out
| Refinance calculation | Amount |
|---|---|
| Assumed completed value | $478,000 |
| Modeled refinance: 75% LTV | $358,500 |
| Fully drawn bridge principal | ($369,000) |
| Principal shortfall | ($10,500) |
| Assumed refinance closing costs | ($7,000) |
| Additional cash needed at refinance | $17,500 |
There is no cash returned at this loan amount. Adding $17,500 at refinance to the $88,551 already spent leaves $106,051 of investor cash unrecovered. This is a cash-use calculation, not a statement of tax basis or realized investment return. Unpaid interest, a prepayment charge, escrows, or other closing conditions would need to be added if applicable.
The modeled property equity is $119,500, calculated as $478,000 value less $358,500 debt. That equity is not spendable cash. Describing a large appraisal-to-loan difference as recovered capital would conceal the additional payoff contribution needed here.
Does $3,450 rent support the permanent loan?
Assume an amortizing 30-year loan at 7.95%. Principal and interest on $358,500 are approximately $2,618.06 monthly. With $850 of taxes, $180 of insurance, and no association dues assumed, monthly PITIA is $3,648.06. Gross rent divided by PITIA is approximately 0.95 coverage.
This calculation defines coverage as rent divided by principal, interest, taxes, insurance, and association dues. It is not a net-operating-income calculation, and the lender may adjust rent or impose other conditions. At a hypothetical 1.15 coverage target, the same inputs support roughly $269,759 of principal. Consequently, the 75% LTV figure is a value-based illustration, not a refinancing approval.
Gross rent is already about $198 below PITIA. A separate 15% allowance for vacancy, maintenance, and management adds $517.50 of monthly operating costs, bringing the modeled deficit to approximately $716. An association fee, if present, would worsen coverage and cash flow. A stronger verified rent, lower loan amount, or different purchase economics would need to be evaluated before using a rental hold as the exit.
Seasoning questions that matter before closing the bridge
Obtain written answers about how long title must be held, how cash-out is defined, and which value the refinance uses. Ask whether purchase price, documented improvement cost, or a new appraisal limits the eligible amount. Confirm how leases, market-rent evidence, completed work, entity ownership, and the bridge payoff affect the review.
A lender’s willingness to review a file without a standard ownership waiting period does not promise cash proceeds or a closing date. In this example the principal shortfall exists even before testing seasoning. A faster refinance might reduce carry, but it cannot create a sufficient loan balance from an unsupported value or rent assumption.
A practical offer decision
Rework the acquisition price and rehab scope alongside the takeout financing, then stress the model with a lower rent, higher tax expense, and longer completion period. Verify school attendance boundaries directly if they form part of the investment thesis. This page makes no district assignment or claim that one side of Naperville rents or sells at a fixed premium.
Compare the Bridgeport refinance shortfall example and the Englewood cash-retention example to see how different bases and rents affect the same process. Submit the actual scenario with purchase terms, scope, rent evidence, and available cash, or use the DSCR calculator to test a proposed payment.