A half-empty strip center in Katy, an apartment complex with units offline after a storm, or an older office building in Westchase that needs new tenants: these properties may not qualify for a permanent loan today, but they can with time and work.
In short: LendingStreet offers short-term, interest-only commercial bridge loans in Houston for investors acquiring, leasing up, renovating or repositioning 9+ unit apartments, mixed-use, retail, office or flex property. The plan is to exit into a permanent commercial or DSCR loan, or to sell, once the property is stabilized. Terms are custom, and every bridge loan requires a full commercial valuation.
Bridge loans are for properties whose current income does not show what they will earn once the business plan is done. In Houston, common examples include older garden apartments in southwest Houston with vacant or down units, retail centers along suburban corridors with empty bays, flex buildings with expiring leases and small office buildings that need repositioning.
The loan is short-term and interest-only so the investor can spend on improvements and lease-up, then refinance or sell.
| Situation | Bridge use | Planned exit |
|---|---|---|
| Apartments with units offline | Acquisition plus renovation | Permanent multifamily loan |
| Retail center with vacant bays | Acquisition and lease-up | Permanent commercial loan or sale |
| Flex building with lease rollover | Re-tenanting | Permanent commercial loan |
| Mixed-use with below-market rents | Repositioning | Permanent loan or cash-out refinance |
Underwriting looks at the purchase price, the renovation budget, the as-is value and a realistic stabilized value. It also tests the exit: once the work is done, will the stabilized NOI support a permanent loan big enough to repay the bridge?
Bridge loans need a full commercial appraisal. Expect the lender to review your budget, contractor bids, leasing plan and your track record on similar properties.
This example is illustrative and not a quote. An investor buys a 60% leased retail strip in the Katy area for $2,000,000 and plans $250,000 of improvements. The bridge loan is $1,350,000 at closing plus a $250,000 improvement holdback, $1,600,000 in total, about 71% of total cost. In-place NOI is about $120,000.
When fully funded, estimated annual interest-only payments are about $152,000, more than in-place NOI. The investor keeps about $32,000 a year in reserves to cover the gap during lease-up.
After leasing, the plan assumes stabilized NOI of $225,000 and a value of $2,900,000. A permanent loan at 70% LTV of $2,030,000 has estimated annual debt service of about $180,018 on a 25-year amortization, a DSCR of about 1.25x. That repays the $1,600,000 bridge with $430,000 left before closing costs.
| Item | Bridge stage | Permanent exit |
|---|---|---|
| Value used | $2,250,000 total cost | $2,900,000 stabilized (assumption) |
| Loan | $1,600,000 | $2,030,000 |
| NOI | $120,000 in place | $225,000 stabilized (assumption) |
| Estimated annual payments | About $152,000 interest-only | About $180,018 |
| Coverage | Shortfall covered by reserves | DSCR about 1.25x |
Bridge plans in Houston need a cushion for weather, insurance and taxes. A storm during renovation can delay work and raise premiums. Insurance quotes can change at renewal, and the appraisal district may raise the value after you buy and improve the property.
Build these into your budget rather than hoping they don't happen.
Contractor availability is another real issue. After a major storm, demand for roofers, electricians and general contractors spikes across the region, which can slow your project and raise costs. Get firm bids and a contingency line before you close.
In flood-prone parts of Houston, a large renovation can count as a substantial improvement under floodplain rules, which can require bringing the building up to current elevation standards. The City of Houston tightened its floodplain rules after Harvey. Check with the city before you finalize a renovation budget for a building in a mapped flood zone.
A bridge request is only as strong as the plan behind it. Underwriting wants to understand what you are buying, what is wrong with it today, what you will change and how long each step will take. A clear plan with a realistic budget and timeline is easier to approve than an aggressive one.
For Houston retail and flex, that usually means a leasing plan with target tenants, market rents supported by nearby leases and an honest estimate of how long vacant space will take to fill. For apartments, it means a unit-by-unit renovation schedule, the rent increase you expect after work, and how many units will be offline at any one time.
Your track record matters too. Investors who have completed similar projects in Houston or comparable Texas markets usually see better terms, and first-time commercial investors may be asked for more liquidity or a lower loan amount.
The most common exit is a permanent commercial or DSCR loan once the property has stabilized occupancy and a few months of improved income. Some investors sell instead. Either way, the bridge is underwritten on a believable exit, not just the purchase.
Texas is a non-disclosure state, so comparable sales are harder to verify. Support your stabilized value with signed leases and rent comparisons where you can.
A commercial bridge loan moves faster than a typical permanent commercial loan, but it still requires a full valuation, environmental review and property-condition review. Have these ready:
Our investor loans are business-purpose loans on non-owner-occupied property. Use the form below or call (877) 298-1001 with the address, price, budget and business plan. The team will test both the bridge and the exit and come back with custom terms.
A short-term, interest-only loan for acquiring, leasing up, renovating or repositioning a commercial property before moving to permanent financing or selling.
9+ unit apartments, mixed-use, retail, office and flex or light industrial. One to eight unit properties use our residential bridge programs.
Yes. Every commercial bridge loan requires a full commercial valuation.
Often, through an improvement holdback released as work is completed. The amount depends on the budget, the plan and the exit.
That is common during lease-up. Plan reserves to cover the shortfall, and expect the lender to review your liquidity.
Usually with a permanent commercial or DSCR loan once the property is stabilized, or by selling. The exit is tested before the bridge closes.
They can. A large renovation in a mapped flood zone may trigger elevation requirements, so check with the city before setting your budget.
There is no single cutoff, but experience on similar properties helps. Newer investors may be asked for more liquidity, a lower loan amount or an experienced partner or property manager on the project.
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