What is a commercial hard money loan?

A commercial hard money loan is short-term bridge financing for non-residential or larger residential properties — multifamily (5+ units), mixed-use, office, retail, industrial, and land. Commercial hard money loans are underwritten on property income metrics (NOI, cap rate, DSCR) rather than comparable sales, and are placed with bridge funds, debt funds, or family offices rather than standard residential hard money lenders.

What is NOI in commercial real estate?

NOI stands for Net Operating Income — the property's income after operating expenses (maintenance, management, taxes, insurance, vacancy allowance) but before debt service. NOI is the foundational underwriting metric for commercial real estate. Commercial lenders use NOI combined with market cap rates to derive property value and calculate DSCR (NOI divided by annual debt service).

How do you get into commercial hard money brokering?

The path into commercial hard money brokering typically starts with multifamily — the property type most adjacent to residential. Build expertise in commercial underwriting metrics (NOI, cap rate, DSCR, rent rolls), identify 2-3 commercial bridge lenders who cover your target property type and markets, start with $1M-$3M deals where you can add value without needing highly specialized relationships, and document closings to access larger deals and more lenders over time.

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Commercial Hard Money Loans: How Large and Complex Deals Work

By Broker Cheetah Editorial Team · April 2026

Direct Answer

Commercial hard money loans — typically $1M+ on multifamily, mixed-use, office, retail, industrial, and land — are underwritten on property income and value rather than residential comparables. They involve different lenders (bridge funds, debt funds, family offices), different underwriting metrics (NOI, cap rate, DSCR), and different relationship dynamics than residential hard money. The broker who can navigate commercial deal placement has access to a larger and less crowded market.

What Counts as Commercial

In hard money, "commercial" generally means:

Multifamily: 5+ unit residential apartment buildings
Mixed-use: Properties with both residential and commercial space
Office, retail, industrial, warehouse: Non-residential property types
Land: Raw or improved land without significant structures
Special purpose: Hospitality, self-storage, manufactured housing communities, assisted living

Properties with 1-4 residential units are typically underwritten on residential hard money programs. Five units and up shifts to commercial underwriting.

Commercial Underwriting Metrics

Commercial deals are not underwritten on comparable sales the way residential properties are. They are underwritten on income.

Net Operating Income (NOI): The property's income after operating expenses (maintenance, management, insurance, taxes, vacancy allowance) but before debt service. This is the foundational number in commercial underwriting.

Cap Rate: NOI divided by property value. If a property generates $120,000 NOI and is worth $1.5M, the cap rate is 8%. Cap rates vary by market and property type. The lender uses market cap rates to derive property value from NOI.

DSCR: On commercial properties, DSCR = NOI ÷ Annual Debt Service. Commercial lenders typically require 1.2-1.3 DSCR minimum. Below 1.0 means the property does not cover its own debt.

Occupancy: What percentage of units or square footage is leased? Underwriting at 80% occupancy is different from 95%. Stabilized vs. transitional determines which lenders will even look at the deal.

Rent Roll: A detailed schedule of every tenant, lease term, monthly rent, and expiration date. The rent roll is the foundation of all commercial income analysis.

Commercial Lenders Are Different

The residential hard money lender who funds 200 fix and flip deals per year is not the right call for a $3M multifamily bridge loan. Commercial deals flow to:

Bridge funds and debt funds: Pools of capital that specialize in commercial transitional lending. Often have sector specializations (multifamily only, industrial, hospitality). More sophisticated underwriting, larger minimum loan sizes.

Family offices: Private capital with the flexibility to fund unusual deals at any size. Access through relationships. Cannot be found with a Google search.

Commercial banks and credit unions: For stabilized commercial properties (strong occupancy, clean rent roll, sufficient DSCR), bank loans at lower rates than bridge funds. Not hard money — longer timelines, more documentation.

CMBS lenders: For stabilized commercial properties above certain size thresholds. Complex process, fixed-rate long-term loans. Not a fit for transitional assets.

The commercial bridge lender is the hard money equivalent for commercial real estate — short-term, fast, based on asset value and income rather than conventional qualification.

Loan Sizes and Fees

Commercial hard money loans start in the $1M range and go to $50M+ for large bridge funds. Minimums vary significantly:

Many residential hard money lenders have a maximum loan amount that falls below typical commercial deal sizes
Commercial bridge funds often have a minimum of $2M-$5M
The middle market ($1M-$3M) is often served by lenders who straddle residential and commercial

Broker fees on commercial deals are typically similar in percentage to residential (1-2 points) but dramatically larger in dollar terms. A 1% broker fee on a $5M deal is $50,000. Know your market for commercial broker compensation and structure accordingly.

The Commercial Broker Relationship Model

Commercial deals take longer than residential. They have more moving parts. The borrower is more sophisticated and often has direct lender relationships themselves.

The value a commercial broker provides is:

Access to commercial bridge lenders the borrower cannot find or access directly
Knowledge of which lender's credit box fits the deal's specific profile (property type, size, occupancy, geography, loan amount)
Speed — knowing where to go first versus running through a slow discovery process
Relationship — lenders who will take a call and move quickly on a deal because they know the broker

To add value in commercial, you need deeper lender relationships and more specialized knowledge than residential requires. The barrier to entry is higher. So is the fee on each deal.

Getting Into Commercial

The path from residential hard money brokering into commercial is:

Build expertise in one commercial property type (multifamily is the most common bridge between residential and commercial)
Identify 2-3 commercial bridge lenders who cover that property type and your target markets, and build real relationships with their origination teams
Start with deals in the $1M-$3M range where you can add value without needing a deep bench of specialized relationships
Document your closings and use them to access more lenders and larger deals

Commercial brokering is not a separate business — it is a natural expansion of residential hard money brokering for brokers who build the right knowledge and relationships over time.

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