Commercial rehab loans.

Every rehab deal contains the same tension. The property is worth what it earns today, and it needs money based on what it will earn later. A lender writing a conventional permanent loan looks at the trailing income and sizes to that, which is almost never enough to fund the work. Rehab financing exists to close that distance.

The capital comes mostly from bridge lenders, private money, and banks with a construction appetite. What they have in common is a willingness to look at the property as it will be rather than only as it is, and a process for releasing money against work actually completed. What they charge for that is a shorter term and a closer relationship with your budget.

Where rehab differs from ground-up construction

The two get grouped together, and they should not be. On a ground-up deal there is nothing standing, no income, and no operating history. The lender is funding a plan. On a rehab deal there is a building, usually some income, sometimes tenants in place, and a track record you can read.

That changes the underwriting in useful ways. A partially occupied property with a rent roll gives a lender something to anchor to. It also introduces complications that new construction does not have, like relocating tenants, working around occupied space, and finding conditions behind a wall that were not in the scope. If your project is genuinely ground-up, that is a different file, and our construction loan page covers it.

The budget is the underwriting

On a stabilized property, the rent roll is what a lender reads hardest. On a rehab file, it is the budget.

Lenders want a scope of work that matches the property, contractor bids that are real, a contingency that acknowledges surprises, and a timeline that a reasonable person could hit. A budget that looks thin gets read as inexperience, because thin budgets are how rehab projects run out of money halfway through. That is the failure mode every rehab lender has seen and priced for.

Draw mechanics matter as much as the total. Money is released in stages against completed work, verified by inspection. Some programs fund in arrears, meaning you pay the contractor and then get reimbursed. If you have not built working capital into your plan for that lag, the project stalls while you wait on a draw.

Plan the takeout before you start

This is the single most consequential thing on a rehab file, and the most commonly deferred.

Rehab debt is short-term. It is meant to be replaced. The exit is either a sale or a permanent refinance, and both depend on the property hitting an income level that supports long-term debt. If the renovation finishes on time but the lease-up runs six months longer than planned, the rehab loan is maturing into a property that is not ready yet.

So we work backward. What will the property earn stabilized, what kind of permanent loan does that support, which lenders write that kind of paper on this asset type, and does the rehab term give you enough runway to get there. Answer those first and the front-end loan almost picks itself. If the exit is a cash-out refinance to recover the capital you put in, that changes which rehab structure makes sense today.

Tell us the property, the scope, the budget, and where you want to be when the work is done. We shop it to lenders who fund the whole arc, not just the first half.