How Would You Structure Financing on a 27-Unit Value-Add Deal? (Bridge → Refi Model)

[Eduardo Cambil]

Hey everyone 👋

I’m analyzing a 27-unit multifamily value-add opportunity in Chicago and would really appreciate some feedback from investors who have done similar deals.

Here’s what I’m trying to wrap my head around — both in terms of financing structure and loan classification.

🏘️ Deal Snapshot (Hypothetical Example)

• Purchase price: around $490K (≈ $18K/unit)

• Rehab budget: about $70K (mostly interior updates + deferred maintenance)

• Market rents: roughly $1,125/unit → ≈ $30K/month or $360K per year gross

• Vacancy: 8 % | Operating expenses: 40 %

• Estimated NOI: ≈ $200K / year

After stabilization, this could support a DSCR refi and healthy cash flow, but the part I'm trying to understand is how the bridge loan and equity piece usually work together.

💡 Questions for the community

1. Bridge Loan Mechanics:
   How do these short-term “interest-only + 100 % rehab funded” bridge loans typically operate in practice?

   • Do lenders usually finance around 80–90 % LTC (purchase + rehab)?

   • Are interest payments made monthly or rolled into the loan until refinance?

   • What rates and terms are you seeing right now (12–15 % range?)

2. Transition to DSCR Refinance:
   After the property is stabilized and rented, what's the usual process and timeline to roll that bridge debt into a DSCR or other long-term loan?

3. Loan Classification Confusion:
   Since this is 27 units, does this fall under commercial lending rather than residential?
   I keep reading that 1–4 units = residential, but 5 + units becomes commercial — how does that affect lender options, underwriting, and down-payment expectations?

4. JV Structuring:
   If someone brings in a JV partner to cover the equity/down payment (say 10–20 %), how do experienced investors usually structure that partnership?

   • Does the JV get repaid at refinance plus a preferred return?

   • Or do they stay in long term for a share of the cash flow and appreciation?

I’m trying to understand how seasoned investors would approach financing and structuring something like this — from acquisition through stabilization and refinance.

Any insights, lessons learned, or recommended reading threads on bridge-to-DSCR multifamily financing would be hugely appreciated 🙏

Thanks in advance for your guidance — I’m here to learn from those who’ve already walked this path.

— Eduardo C.

[Jason Wray]

Do you already own a Multifamily 5+ unit building?  Anything 5+ is commercial 4 and under is residential.  5+ requires much more in terms of borrower conditions inlcuding down payment, Higher Fico scores, Land lord experience, some lenders requiure you to not only own a primary home but also 1 or more invetment properties for 12 months (used for landlord eperience, pay history, collateral, etc.

They may also require PITI reserves 12-24 months or 6 months per property in addition to the subject property. DSCR ratio may require 1.25% or greater with a 90% occupancy ratio and no deferred maintenance.

If you are going to jump into the REI game I would start with a 2-4 unit first and move up from there. Having a JV partner is great but each borrower needs compesating benefits if one has a lower credit score it can hurt unless the lender allows higher Fico of borrower who makes the most money. If not I would put in their name and add you to title after you close or part of the LLC.

Keep in mind in most cases DSCR lenders usually want to use any partner on the LLC who owns more than 19% of the LLC/Business. You can amend the LLC % and then change it back after you close if one partners Fico score is lower or does not want to sign a personal Guarnatee or be on the mortgage.

Feel free to reach out if you have more in depth questions, better to know in advance then find out the hard way or lose time/money.  Check out my profile and send me an email if needed, always happy to help other BP members!