Side by side
| Question | Long-term 5-10 unit DSCR | Hard money / bridge |
|---|---|---|
| Sized on | Stabilized rent roll and operating income | Price, renovation budget and after-repair value |
| Building condition | Stable, few major repairs | Can be vacant or need major work |
| Term | Long-term | Short-term, typically with a maturity date you must refinance or sell before |
| Renovation funds | Rarely included | Often available as a holdback |
| Pricing | Generally lower than short-term money | Generally higher; you pay for speed and flexibility |
| Exit needed? | No | Yes: refinance or sale |
Signs you need short-term money first
- Multiple vacant or down units
- Roof, foundation, plumbing or electrical replacement needed
- Non-paying tenants or month-to-month leases far below market
- No usable operating history from the seller
Long-term programs size loans on stable history. Without one, there is nothing for them to underwrite. See bridge-to-DSCR for the full plan.
The exit is the whole plan
A short-term loan works only if the refinance works. Before you buy, estimate stabilized rents from comparable leased units, the next tax bill on the renovated value, insurance after the work, and normalized operating costs. Then check long-term coverage on the loan you will need to repay the bridge lender and the renovation costs. If coverage is thin on conservative numbers, the risk is that you are stuck extending short-term debt.
Run those numbers in the 5-10 unit DSCR calculator and read the 8-unit worked example.
When to skip hard money
If the building is already leased at or near market, in good repair and the seller has clean records, going straight to a purchase loan avoids paying for short-term money and a second closing.
Comparisons are general and qualitative. Program terms vary by lender and change over time. Not a commitment to lend.