The Challenge
A sponsor approached Encore Finance after completing construction on a newly delivered 40-unit build-for-rent townhome community in the Salt Lake City market.
The immediate need was retiring the existing construction loan while providing runway to continue leasing the remaining units and stabilize the property before transitioning into long-term financing.
Like many newly delivered BFR communities, the property was generating increasing cash flow as occupancy grew, but it needed additional time for leasing activity to mature.
The objective was clear: refinance the construction debt, reduce financing costs, and create enough runway to complete lease-up without rushing into permanent financing before the property was fully stabilized.
The Solution
Encore Finance structured a bridge loan that retired the sponsor’s construction debt while providing the additional term needed to complete lease-up and stabilize the community.
The financing was designed around the property’s next stage of its lifecycle, giving the sponsor the flexibility to continue executing the business plan while positioning the asset for long-term ownership.
Because Encore Finance also provides long-term financing, this wasn’t viewed as a standalone refinance. Instead, the bridge loan was structured as the next step in the property’s financing strategy. Once the community reaches stabilization, the sponsor will have the opportunity to transition into permanent financing with the same lending partner.
The Outcome
The sponsor successfully refinanced out of the construction loan, secured the time needed to complete lease-up, and positioned the property for long-term financing once stabilized.
For experienced BFR investors, construction completion is only one milestone in the life of an asset. The transition from delivery to stabilization often requires financing that aligns with the realities of lease-up rather than forcing an early move into permanent debt.
Encore Finance structures bridge loans with that transition in mind, helping sponsors move confidently from construction through stabilization while providing a consistent financing partner for the next stage of ownership.
Learn More
To learn more about how Encore Finance bridge loans can support your build-for-rent investment strategy, reach out to Ryan Harper at Ryan@encorefinance.com.
