Refinancing out of Bridge Loan

Memphis, Tennessee
General Real Estate Investing
7moFollow

Refinancing out of Bridge Loan

Justin DaltonPro Member
Member since 2024 · 29 posts · 25 votes

Good afternoon, everyone 

I have a question about refinancing out of my bridge loan.

So I have a duplex in Memphis that I acquired last year. I got one side rehabbed and the other side waiting for  a report on what rehab looks like. (Since tenant just moved out).

My issue is I went to refinance out of my bridge loan.However after the property was appraised, it's not currently worth enough where a bank (that I have found so far) will take it on without me paying another $29,000 to cover the difference.

I don't have that capital at the moment to do this and next month the loan is mature so the interest only payments go up.

My only thought is to pay the higher interest until the other side is rehabbed and have it reappraised.

Im open to thoughts and opinions.

thanks for your time

3Reply
194 views

Most Popular Reply

Drew SygitBusiness Member
Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
7mo
Quote from @Justin Dalton:

Good afternoon, everyone 

I have a question about refinancing out of my bridge loan.

So I have a duplex in Memphis that I acquired last year. I got one side rehabbed and the other side waiting for  a report on what rehab looks like. (Since tenant just moved out).

My issue is I went to refinance out of my bridge loan.However after the property was appraised, it's not currently worth enough where a bank (that I have found so far) will take it on without me paying another $29,000 to cover the difference.

I don't have that capital at the moment to do this and next month the loan is mature so the interest only payments go up.

My only thought is to pay the higher interest until the other side is rehabbed and have it reappraised.

Im open to thoughts and opinions.

thanks for your time


 You want to be VERY CAREFUL about what you do next!

Have seen many newer investors make the mistake of assuming every dollar they spend improving a property will directly increase the value.

NOT TRUE!

According to National Association of Realtors, very FEW improvements improve value in alignment iwth their costs:

https://www.nar.realtor/magazine/real-estate-news/sales-mark...

Highly recommend finding an agent that understands all this, so you don't waste money on improvements/rehab that won't increase the value enough so you can refinance.

[email protected]248-209-6824
Logical Property Management4.9451 Reviews
WebsiteView Page
2Reply
See this reply in the discussion

10 Replies

Jump to latestLatest
  • Pierre Guirguis
    Lender · Marlboro, NJ · Member since 2025 · 243 posts · 147 votes
    7mo

    This is a very common bridge-to-perm issue right now. If one unit isn’t fully rehabbed and leased, most banks will underwrite off in-place income, not stabilized income. That alone can create an appraisal gap.

    I’d look at three things:

    - Does finishing the second unit materially increase NOI and appraised value?
    - Can you get a short bridge extension?
    - Is there a lender that will underwrite to projected rents once both units are leased?

    Sometimes it’s not the deal, it’s the lender box. If stabilizing the second side closes the value gap within a few months, carrying the higher rate briefly might make sense. If not, then structure needs to change.

    1Reply
  • Justin DaltonPro Member
    OP
    Member since 2024 · 29 posts · 25 votes
    7mo
    Thank you for the reply Pierre. I appreciate you taking time to respond to my post. I’ll definitely keep that in mind. There definitely will be a little value add to the property. As far as extension that’s what I have but at a higher rate or will be next month March. Been working to get the one side rented to relieve some of the pressure.
    0Reply
  • Nick BelskyBusiness Member
    Residential and Commercial Broker · Member since 2021 · 1k+ posts · 704 votes
    7mo

    @Justin Dalton

    Give us some numbers to work with.  

    What is the value as is right now and what do you owe on it?  

    How much rehab will you spend and what will it be worth after repairs are completed?

    Cheers!

    [email protected]
    Belsky Mortgage, LLC527 Reviews
    WebsiteView Page
    0Reply
    • Justin DaltonPro Member
      OP
      Member since 2024 · 29 posts · 25 votes
      7mo

      @Nick Belsky 

      As of now it appraised for $123,000 . That is the original price agreed upon closing on the property. 

      I placed 20% down and other closing costs.  I got the loan for $105,000 and change plus rehab cost of around $15,500.

      I'm not sure on rehab cost in the other side. But if it's like the one around another $15,000 or so. 

      originally was looking at comps of around $155,000 in that area. 

      Hope this helps.

      0Reply
  • Matthew CrivelliBusiness Member
    Lender · MA · Member since 2021 · 1k+ posts · 1k+ votes
    7mo

    Fix the entire property up before you refinance. Completing the rehab is going to yield a higher ARV. If you need an extension, meaning you are nearing the end of the loan term, take it. Once the loan is in default, you will have an even harder time refinancing the property.

    [email protected]413-348-8346
    Freedom Capital Funding, LLC523 Reviews
    WebsiteView Page
    0Reply
  • Matthew BernalBusiness Member
    Investor · Austin, TX · Member since 2021 · 497 posts · 126 votes
    7mo

    This is likely happening because the property isn’t fully stabilized yet. With one unit vacant, the appraisal and refinance numbers will usually come in low.

    If possible, see if your bridge lender will extend the loan. Finish the rehab, lease the second unit, then refinance once both sides are rented. That should improve your value and options.

    Have you asked the lender about an extension yet?

    [email protected]832-981-3190
    0Reply
  • Stacy RaskinBusiness Member
    Lender · Member since 2022 · 1k+ posts · 497 votes
    7mo

    Different appraisers may appraise the property differently. I've seen DSCR loan appraisals come back thousands of dollars in difference in value for around the same price. If the unrehabbed unit is habitable so just older looking but no health and safety issues, it could qualify for a DSCR loan. Also, lenders pretty widely in rates and terms even when looking at the same credit score and LTV.

    If you had a different appraisal with a different lender, the value might be different. There are some lenders who want a complete file so they don't see an appraisal until the full file is submitted so in those cases, some investors will do more than on appraisal hoping to get the value they want. I've seen one investor do three on the same property until he got the value he wanted as his file wasn't submitted until all paperwork was complete including the appraisal so the lender only saw the one appraisal. You need to be realistic about your market and comps but appraisals can vary widely. There are options. Happy to connect to discuss further. 

    [email protected]818-770-0340
    Bright Skyline518 Reviews
    WebsiteView Page
    0Reply
  • Drew SygitBusiness Member
    Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
    7mo
    Quote from @Justin Dalton:

    Good afternoon, everyone 

    I have a question about refinancing out of my bridge loan.

    So I have a duplex in Memphis that I acquired last year. I got one side rehabbed and the other side waiting for  a report on what rehab looks like. (Since tenant just moved out).

    My issue is I went to refinance out of my bridge loan.However after the property was appraised, it's not currently worth enough where a bank (that I have found so far) will take it on without me paying another $29,000 to cover the difference.

    I don't have that capital at the moment to do this and next month the loan is mature so the interest only payments go up.

    My only thought is to pay the higher interest until the other side is rehabbed and have it reappraised.

    Im open to thoughts and opinions.

    thanks for your time


     You want to be VERY CAREFUL about what you do next!

    Have seen many newer investors make the mistake of assuming every dollar they spend improving a property will directly increase the value.

    NOT TRUE!

    According to National Association of Realtors, very FEW improvements improve value in alignment iwth their costs:

    https://www.nar.realtor/magazine/real-estate-news/sales-mark...

    Highly recommend finding an agent that understands all this, so you don't waste money on improvements/rehab that won't increase the value enough so you can refinance.

    [email protected]248-209-6824
    Logical Property Management4.9451 Reviews
    WebsiteView Page
    2Reply
    • Justin DaltonPro Member
      OP
      Member since 2024 · 29 posts · 25 votes
      7mo

      @Drew Sygit I'm fully aware that every dollar does not increase the value of a home. I am also a contractor  not just a investor. so that is not the issue here in this situation. Appreciate you taken the time to comment on my post though.

      0Reply
  • Jordan RayBusiness Member
    Real Estate Agent · Memphis, TN · Member since 2023 · 623 posts · 322 votes
    7mo
    Quote from @Justin Dalton:

    Good afternoon, everyone 

    I have a question about refinancing out of my bridge loan.

    So I have a duplex in Memphis that I acquired last year. I got one side rehabbed and the other side waiting for  a report on what rehab looks like. (Since tenant just moved out).

    My issue is I went to refinance out of my bridge loan.However after the property was appraised, it's not currently worth enough where a bank (that I have found so far) will take it on without me paying another $29,000 to cover the difference.

    I don't have that capital at the moment to do this and next month the loan is mature so the interest only payments go up.

    My only thought is to pay the higher interest until the other side is rehabbed and have it reappraised.

    Im open to thoughts and opinions.

    thanks for your time


    Welcome to BiggerPockets! First off, you’re not alone—this exact scenario happens all the time when someone tries to refinance before the property is fully stabilized, especially with a duplex where one unit isn’t producing income yet. Right now the appraiser is valuing you based on a partially performing asset, so the bank is underwriting risk accordingly, which is why you’re seeing that $29K gap. If you can cash flow the higher interest for a short window, finishing the rehab on the second side and getting it leased at market rent is usually the cleanest path because a fully stabilized duplex with two paying units often appraises off income strength rather than just comps. That said, you don’t want to drift into negative carry territory too long. It may be worth speaking with a local investor-focused lender or community bank that understands Memphis duplex valuations better than larger institutions, or even asking your current lender about a short extension while you complete stabilization. Memphis still supports strong rent-to-price ratios in many areas, but the key to avoiding this situation in the future is conservative underwriting upfront and building in more buffer before maturity. As you move forward, keep analyzing ARVs, realistic rents, and neighborhood trends so you’re confident the stabilized value will support the refi, and lean on your boots-on-the-ground team—an investor-friendly agent who also owns rentals, a solid property manager, and a reliable general contractor—to help tighten up scope, timelines, and rent projections. If you want to talk through Memphis-specific refi options or lenders that are more investor-aligned, I’m happy to help connect you to them. Feel free to reach out, talk soon!
    [email protected]662-642-1458
    Jordan Ray - eXp Realty5111 Reviews
    WebsiteView Page
    1Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free