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- February 13, 2026
- Insights
Most capital plans in Build-for-Rent are built as if projects move neatly from construction or acquisition straight into permanent financing.
In reality, that’s rarely how things play out.
In the real world, developers and investors almost always run into one of two things: financing gaps during construction, or the awkward “in-between” phase when a project is underway and progressing, but not quite ready for permanent debt.
At that point, most borrowers assume their only options are to refinance immediately or push for an extension on their existing loan. What many don’t realize is that there’s often a third path, and in many cases, it’s the better one: using a bridge loan strategically (as opposed to reactively, as they’re more often used).
Bridge loans aren’t just an emergency fallback. When used correctly, they can be a deliberate part of a timing strategy that preserves flexibility, improves outcomes, and prevents premature decisions.
That’s exactly why bridge credit facilities have become one of the fastest-growing parts of what we do at Encore Finance.
The Problem: Timing Doesn’t Always Line Up
The “in-between” problem shows up in different ways across real BFR projects, but at its core, it’s always about timing. The project is moving forward, but the financing assumptions don’t quite match where the asset actually is.
Here are a few common scenarios you’ll probably recognize.
Scenario 1: The Original Loan Is Coming Due, but You’re Not Ready to Refinance
This most often happens coming out of a construction loan, but it can also apply when an acquisition bridge loan is nearing maturity.
You’re running out of extensions. The clock is ticking, but the asset isn’t yet producing the stable, proven income that permanent financing requires. Lease-up may still be underway and rents may still be moving, but expenses haven’t fully normalized.
This is typically where borrowers view bridge financing as an emergency option: something to reach for only because they don’t qualify for permanent debt yet.
The issue isn’t just that the asset isn’t ready. The bigger problem is assuming that the only solution is to force it to be.
Scenario 2: You Qualify for Permanent Financing, But It’s The Worst Time to Lock It In
In this scenario, you’re eligible to refinance into permanent debt. You’ve cleared the DSCR hurdle, and lenders are willing to quote terms.
The assumption is that if you qualify, refinancing is the obvious move.
But in many cases, it’s not the optimal one.
If the asset’s income isn’t yet optimized and its value isn’t fully expressed, refinancing at this point can lock in sub-optimal leverage, pricing, or structure. If rents are still climbing and cash flow is still improving, then a few more months of seasoning could materially change the outcome.
This is often the most expensive moment to lock in permanent debt.
Scenario 3: Phased-Delivery Projects That Hit Capital Snags Mid-Stream
This shows up most often in ground-up BFR development, especially projects delivered in phases.
In these projects, homes come online in tranches and construction budgets stretch across multiple phases. In so many cases, something changes before the project is even out of the construction loan. Usually it’s cost overruns, labor or material costs that run higher than expected, or timelines that get extended for one reason or another.
For smaller projects (like those in the 50-to-100-unit range), those disruptions can create a sudden need for capital. There’s less margin for error and fewer ways to absorb delays.
Yet most capital plans treat phased-delivery projects the same way they treat single-delivery projects: plan for one major refinance event at the end.
Reality often doesn’t cooperate. Additional capital is needed simply to finish the project.
In these situations, most borrowers default to one of three moves: stretch the construction loan, inject new equity, or slow the project down. All three increase cost or risk, and none address the underlying mismatch in the capital structure.
How Encore Helps Borrowers Solve the In-Between
All three of the above scenarios share the same underlying issue: the project is underway and progressing, but the capital plan assumes it’s further along than it actually is.
As a result, there’s a need for capital before the asset is fully optimized for permanent financing.
Most financing structures don’t account for that gap.
The solution in all three cases is the same: use financing that matches where the project is right now, not where it’s eventually going to end up.
At Encore Finance, we do this all the time through customized bridge loans designed specifically for these transitional moments. Rather than treating bridge financing as a temporary patch, we use it as a deliberate part of the capital strategy. One that often puts borrowers in a better position when it’s time to lock in permanent debt.
In practice, that often means financing completed or substantially complete assets as they come online, aggregating them over time, and giving borrowers the flexibility to move into long-term portfolio financing when the timing actually makes sense, not just when the loan clock runs out.
These scenarios are so common in BFR development and acquisition that bridge credit facilities have become one of our most frequently used tools for helping borrowers keep projects moving without forcing premature decisions.
Thinking Ahead About Your Next Refinance?
If you’re approaching a loan maturity or planning the transition from construction to long-term financing, it’s worth thinking through your options before the clock forces a decision.
Encore Finance works with borrowers every day on these in-between moments. Reach out today to start the conversation.
