Why the exit matters more than the entry
Short-term lenders (bridge, construction, fix-and-flip) are far more focused on how they get repaid than on the deal's upside. A clear, realistic exit is often the single biggest factor in approval.
The three accepted exits
Nearly every accepted exit strategy falls into one of these categories.
- Sale of the asset (with comps supporting the projected price)
- Refinance into permanent or long-term debt (with a lender letter of interest or realistic DSCR)
- Payoff from another closing source (contract of sale, maturing investment, etc.)
What weakens an exit
'We'll figure it out' is not an exit. Neither is an exit that depends on a market condition improving without support (rents rising, cap rates compressing) or on financing you haven't actually explored.
Build in a backup
Strong applications show a primary exit and a credible backup — for example, sell the flip, but if it doesn't sell in 90 days, refinance to a DSCR rental loan instead.