Plenty of Austin commercial property is worth buying today but cannot qualify for a permanent loan yet: an apartment complex with dated units, a strip center with empty bays, an office building half leased. A bridge loan is built for the time between buying it and fixing it.
In short: LendingStreet offers short-term, interest-only commercial bridge loans in the Austin metro for acquisition, lease-up, renovation and repositioning of 9+ unit multifamily, mixed-use, retail, office and flex property. Loans have custom terms up to $5M+, require a full valuation, and are built around a clear exit: a permanent commercial or DSCR loan, or a sale. We size on the current income, the business plan and your experience carrying it out.
A permanent loan wants stabilized income. A bridge loan is for property that does not have it yet but has a believable plan to get there. In Austin, that usually means one of a few situations.
Bridge loans are short-term and interest-only, so the payment during the plan is lower than an amortizing loan would be. That helps a property with thin in-place income carry its debt while work is underway. Terms are set per deal, and recourse varies by program.
Commercial bridge loans need a full valuation. We look at the as-is value, the business plan, the budget and timeline, and what the property should be worth and earn once the plan is done. We also want to see that the property is cash-flow positive today, or close to it, so the plan is not relying on hope alone.
Your equity and reserves matter too. Renovations in Austin can run over budget and behind schedule, especially when permits, contractor availability or older building systems create surprises. A bridge plan with a contingency and reserves for interest during the work is far easier to approve.
This example is illustrative and not a quote. An investor buys a 20-unit complex at an assumed as-is value of $2,800,000. Rents average $1,300 a month and two units are down, so underwriting assumes 10% vacancy and credit loss. In-place NOI is $176,800. A bridge loan at 55% of value, $1,540,000, has estimated annual interest-only debt service of $146,300, for a DSCR of about 1.21x. The investor funds a $300,000 renovation budget from equity in this example.
After renovations, the plan assumes average rents of $1,600 and 7% vacancy, for NOI of $243,620. At an assumed stabilized value of $3,300,000, a 70% LTV permanent loan of $2,310,000 would carry estimated annual debt service of $200,362 and a DSCR of about 1.22x, enough to pay off the bridge loan.
| Line | Today on the bridge loan | Stabilized exit |
|---|---|---|
| Units | 20 | 20 |
| Average monthly rent (assumed) | $1,300 | $1,600 |
| Gross potential rent | $312,000 | $384,000 |
| Vacancy and credit loss (assumed) | 10% | 7% |
| Other income (assumed) | $8,000 | $12,000 |
| Operating expenses (assumed) | $112,000 | $125,500 |
| NOI | $176,800 | $243,620 |
| Value (assumed) | $2,800,000 | $3,300,000 |
| Loan amount | $1,540,000 at 55% LTV | $2,310,000 at 70% LTV |
| Estimated annual debt service | $146,300 interest-only | $200,362 |
| DSCR | 1.21x | 1.22x |
Every bridge loan needs an exit. For most Austin investors, that is a permanent commercial or DSCR loan once the property is stabilized, or a sale. We look hard at whether the planned rents and occupancy are realistic.
In a metro that has absorbed a large wave of new apartment supply, rent premiums after renovation may be smaller than a pro forma suggests, and lease-up can take longer when newer buildings are offering concessions. Build in time and a cushion. For retail and office, assume vacant space may take a while to lease and that tenant improvements and leasing costs will come out of your pocket.
Property taxes in Texas are high and set locally through the Travis, Williamson or Hays central appraisal district, and a sale usually resets the value. Budget the tax line on your purchase price. Owners can protest each year; confirm current values and rates with the appraisal district.
Insurance during renovation can cost more than on a stabilized building, and hail is a real exposure across Central Texas. If the property is near Onion Creek, Walnut Creek or another flood-prone creek, get a flood determination before you commit. Permits from the City of Austin or the suburban city can add time, so build that into your schedule, along with a few extra months of carrying costs in case the work runs long.
Bridge loans lean more on the sponsor than permanent loans do. We want to see that you, or your team, have done this kind of plan before.
Bridge loans can move faster than permanent loans, but commercial bridge is still slower than residential. A full valuation is required, and lease review, environmental and property condition reports are common. Texas is a non-disclosure state, so verified comps can take extra work. A complete file is the best way to hit a contract deadline.
Our investor loans are business-purpose loans on non-owner-occupied property. Send the deal, your budget and your exit plan using the form below, or call (877) 298-1001. We will tell you whether the plan supports a bridge loan today and what the permanent loan could look like at the end. If the plan needs work, we will say so and explain what would make it stronger.
A short-term, interest-only loan for buying, leasing up, renovating or repositioning commercial property, with a planned exit to permanent financing or a sale.
Yes. Commercial loans require a full valuation, which usually looks at both the as-is value and the plan.
Often, if the plan to lease the space is realistic and the property can carry its costs in the meantime. Expect tenant improvement and leasing costs to be part of the review.
Terms are set per deal and are short-term by design, long enough to carry out the plan and reach the exit.
Refinancing into a permanent commercial or DSCR loan once the property is stabilized, or selling the property.
Yes, more than on a permanent loan. We look at whether you have carried out similar renovation or lease-up plans.
Often, but it is still a commercial loan. Valuation, lease review and third-party reports take time, so start early.
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