Bridge Gap Calculator

Bridge-to-perm is the standard value-add structure: bridge loan funds acquisition + renovation, stabilized perm takes out. Mispricing the gap breaks deals. This calculator models it.

Bridge balance at stabilization

Stabilized NOI

Perm rate

Perm amortization years

DSCR target

LTV cap

Stabilized cap rate

Bridge gap

$655,139

Perm loan proceeds

$5,344,861

Stabilized value

$8,666,667

LTV-max loan

$6,066,667

DSCR-max loan

$5,344,861

How the math works

Bridge gap happens when stabilized value × LTV or NOI ÷ DSCR falls short of the bridge balance. Both constraints bind; the smaller one wins.

Sponsors without a plan get crushed. Good sponsors stress-test 12-18 months out, hedge the rate, reserve capital, and negotiate extensions when needed.

How to Use

Enter bridge balance at stabilization.
Enter stabilized NOI.
Enter perm rate and DSCR target.
Enter stabilized LTV cap.
Read perm proceeds and gap.

Frequently Asked Questions

When is gap common?

Interest-rate rises during bridge tenor; NOI missed target at stabilization; cap rates expanded pushing value down. Any one creates gap; multiple stack.

How to prevent?

Buy forward rate lock on perm 6-12 months out. Pre-stabilize NOI with flexible rent-up strategy. Maintain reserves for cap-ex overrun during renovation. Don't underwrite 95% occupancy at acquisition.

Gap too big?

Consider sale, recapitalization with pref equity, bridge extension, or lender modification. Panic leads to bad decisions; early planning gives options.

When does a lender negotiate vs foreclose?

Lenders calculate their net recovery from foreclosure (asset value minus legal, time, and sale costs) and compare to any workout proposal. If your offer nets the lender more than foreclosure, and you present it with clear sources of capital, most lenders will engage. Bring a credible sponsor, documented sources, and a timeline — vague asks get declined. Build the relationship before distress, not after.