Multifamily Bridge Loans for Apartment Buildings (5+ Units)

What a multifamily bridge loan is for

A multifamily bridge loan is short-term, first-lien financing on an apartment building that is not yet ready for long-term debt, or that has to close faster than a permanent lender can move. Agency, bank and life-company lenders generally want stabilized occupancy, a clean trailing operating history and expenses in line with the market before they fund. Many of the best apartment deals have none of those things on the day they trade. A bridge loan finances the gap: you buy or refinance now, execute the business plan, and repay the loan with a long-term refinance or a sale once the building's income supports it.

Our multifamily program covers apartment properties of five or more units. Smaller residential buildings of one to four units are financed through our separate single-family rental and residential investment loans.

Apartment bridge loans for value-add, lease-up, heavy rehab and stabilized deals

Every apartment deal sits somewhere on the path from distressed to stabilized. We lend across that path, and the structure follows the business plan.

• Value-add acquisitions. Rents are below market, management is tired or units need interior updates. The plan is to renovate as units turn over, raise rents to market and tighten expenses.
• Lease-up. The building is renovated or newly delivered but not yet full. The loan carries the property while occupancy and collections build to a level a permanent lender will accept.
• Heavy rehab. Significant vacancy, deferred maintenance or major systems work such as roofs, mechanicals or full unit gut renovations. These deals lean hardest on the budget, the contractor and the sponsor's track record.
• Stabilized bridge. The building performs, but the timing does not work for permanent debt: a maturing loan, a partner buyout, a quick-close purchase or a short hold before a sale or recapitalization.
• Construction completion. A multifamily project stalled short of completion and needs capital to finish and lease.
• Refinance and cash-out. Replace a maturing or expensive loan, or pull equity out to fund improvements or the next acquisition.

Small balance multifamily loans in the Mid-Atlantic and North Carolina

Loans typically run $100,000 to $2,000,000; smaller loans, and larger loans up to $5,000,000, are considered case by case, which puts most of our apartment lending in the small balance multifamily space: smaller apartment buildings, garden complexes, walk-ups and older urban apartment properties that are often too small, too transitional or too time-sensitive for agency and bank programs. We lend in Washington DC, Maryland, Virginia, Delaware, Pennsylvania and New Jersey across the Mid-Atlantic, and in North Carolina. Each state page covers the local markets we see most often.

How we underwrite a multifamily bridge loan

Bridge underwriting looks forward as much as backward. We want to understand what the building earns today, what it can realistically earn after the plan is executed, and whether that future income will support the exit. These are the items that carry the most weight.

• Trailing 12-month operating statement (T-12) and rent roll. The T-12 shows actual collected income and real expenses; the rent roll shows who is in place, at what rent and on what lease terms. Together they tell us where the building truly stands.
• In-place versus stabilized NOI. We size around in-place net operating income and review the stabilized NOI your plan projects, testing the assumptions behind the gap: rent growth, renovation premiums, expense savings and timing.
• Physical versus economic occupancy. A building can be 95% physically occupied and still collect far less than its rent roll suggests because of delinquencies, concessions or non-paying units. Economic occupancy, meaning the rent actually collected against the potential rent, matters more than the headline number.
• Rent comparables. Projected rents need support from comparable renovated units nearby, not just the best unit in the submarket.
• Capex budget and scope. A unit-by-unit and building-wide budget with a realistic timeline and contingency. On loans that include renovation funds, leverage is measured against total project cost, up to 70% LTC.
• Debt service coverage at exit. The key question for most bridge loans: once the plan is complete, will the stabilized income support a permanent loan large enough to repay us? We look at projected debt service coverage under realistic long-term financing.
• Sponsor experience. A borrower who has renovated, leased and managed similar buildings makes the review faster and the structure stronger. First-time apartment buyers are reviewed too, especially with an experienced manager or partner on the team.
• Market, condition and expenses. Taxes after a sale, insurance, utilities, payroll and the property's physical condition, including items a permanent lender or inspector is likely to flag.

Documentation stays limited to what explains the property, the plan and the borrower. Valuation is handled in-house or with a broker price opinion (BPO), with no full appraisal, and there is no minimum credit score.

Multifamily bridge loan parameters

• Loan size: $100,000 to $2,000,000; smaller loans, and larger loans up to $5,000,000, are considered case by case
• Leverage: up to 70% LTV / LTC, first lien
• Rate: 10.99% to 12.99% (current typical range; subject to change, market conditions and underwriting)
• Origination: 2 to 4 points
• Term: 12 months, plus one optional 6-month extension
• Payments: interest-only; flexible prepayment
• Purchase down payment: typically 20% to 50%
• Term sheet: typically within 24 hours of intake review

All terms are indicative and subject to underwriting, valuation and diligence.

Property conditions we consider

We regularly review apartment buildings that conventional lenders pass on, including properties with:

• High vacancy or units offline for renovation
• Below-market rents and expiring leases
• Deferred maintenance and code items
• Delinquency or collection problems
• Recent ownership or management changes
• Maturing loans or a lender pushing for payoff
• Partially completed renovations
• Short or incomplete operating histories

Each of these is a question of plan and price, not an automatic no. What we need is a credible path from the building's current state to a stabilized property that can be refinanced or sold.

Planning the exit: agency, DSCR or bank refinance

Most multifamily bridge loans are repaid by a long-term refinance once the building is stabilized. Depending on size and quality, that may be an agency loan, a bank or credit union loan, or a DSCR-style investor loan; some sponsors sell instead. Before you close, think about what the takeout lender will want to see: occupancy held for a period of months, collected rents that support the new loan, and expenses in line with the market. Building that runway into the business plan is the single best protection against an expensive extension. We will talk through the timeline during the review so the loan matches the time you actually need.

Submit an apartment deal

Start the commercial loan application and choose Multifamily; it asks for the unit count, occupancy, rent roll, NOI and your value-add plan. Mortgage brokers can submit through our Broker Program, which protects the broker relationship on every loan. For buildings with ground-floor commercial space, see mixed-use loans; for general program details, see commercial bridge loans and small balance commercial loans.