Flipping a small apartment building or mixed-use property works differently from flipping a house. Value comes from income, timelines run longer and the rehab is bigger.
In short: A commercial fix and flip loan is short-term financing to buy, renovate and then sell or refinance a small commercial, mixed-use or 5+ unit residential property. LendingStreet finances these value-add projects with custom terms, and commercial loans start from 7.50% depending on the property and plan. Unlike a house flip, value is driven by net operating income (NOI), so the lender looks at current and projected rents, expenses and your business plan. Expect a longer timeline, a larger rehab budget and more documentation than a single-family flip.
Commercial flips are value-add projects on income-producing property. The goal is to raise income or fix physical and operational problems, then sell or refinance at a higher value.
Common examples include a dated 8-unit apartment building with below-market rents, a mixed-use building with vacant ground-floor retail, or a small office or retail building that needs repositioning.
A house flip is valued mostly by comparable sales. A commercial property is valued mostly by the income it produces, so the business plan matters as much as the renovation.
That changes how the deal is sized, how long it takes and what the lender wants to see.
| Residential flip (1–4 units) | Commercial flip | |
|---|---|---|
| Value driven by | Comparable sales | NOI and cap rates, plus comparable sales |
| Typical timeline | Often under a year | Often longer, including lease-up |
| Rehab scope | Interior and systems | Larger: units, common areas, systems, sometimes code upgrades |
| Exit | Sell to an owner-occupant or investor | Sell to an investor or refinance into long-term debt |
| Terms | Standard fix & flip programs | Custom terms |
Net operating income is rent and other income minus operating expenses, before debt payments. Buyers and lenders value commercial property by dividing NOI by a market cap rate.
That means every dollar of added NOI adds to value. Raising rents to market, reducing vacancy, adding income sources such as laundry or parking, and cutting expenses all count. A beautiful renovation that does not raise income may not raise value much.
This example is illustrative and not a quote. An investor buys an 8-unit building for $900,000. Current NOI is $54,000. The plan is a $240,000 renovation of units and common areas, then leasing at higher rents for a projected stabilized NOI of $96,000.
At an illustrative 7% cap rate, the stabilized value would be $96,000 / 0.07 = about $1,371,000. If the loan covers 75% of purchase ($675,000) plus the full $240,000 rehab, the total loan is $915,000, about 67% of the projected stabilized value. The investor brings $225,000 plus closing costs and reserves.
Commercial terms are custom, so the leverage in this example is only for illustration. The real numbers depend on the property, the market and your experience.
Commercial value-add files take more paperwork because the lender is underwriting both the property and the plan.
If the property already produces income and needs only light work, a commercial bridge loan may fit better than a heavy rehab loan. For multifamily specifically, a multifamily bridge loan can carry the project through lease-up.
Once the property is stabilized, many investors refinance into longer-term debt, such as commercial DSCR or multifamily loans, instead of selling.
Send the purchase contract, rent roll, operating statements, your renovation budget and timeline, your projected stabilized income and a summary of your experience. Photos of the current condition help.
Our financing team reviews the scenario and comes back with 2–3 options. Commercial and mixed-use loans run up to $5M+.
Yes, for 5+ unit properties we offer value-add financing with custom terms. The deal is underwritten on income and the business plan, not just comparable sales.
Commercial loans start from 7.50%, and bridge loans from 7.99%. Your rate depends on the property, leverage, your experience and the business plan.
They can. Renovation funds are typically released in draws as work is completed and inspected, similar to a residential flip.
Terms are custom and often longer than a house flip to allow for renovation and lease-up. Plan your timeline before you apply.
Experience helps a great deal. Investors new to commercial property may still qualify, especially with residential experience, a strong team and solid reserves.
Yes. Many investors refinance a stabilized property into long-term commercial DSCR or multifamily financing.
2-3 competing quotes from 30+ capital sources. No credit pull. No commitment.
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