Private Capital as a Transition Tool
Private capital is not always the cheapest capital. It is often the most useful capital during acquisition, repositioning, or time-sensitive transitions where banks cannot move quickly or will not fund the asset as-is.
A Common Capital Sequence
- Acquire: private money or bridge capital closes quickly.
- Stabilize: improve occupancy, operations, or condition.
- Refinance: transition to DSCR or bank financing once stabilized.
When This Strategy Works Well
- Transitional assets with a clear stabilization plan
- Acquisitions with tight timelines
- Value-add opportunities where permanent debt is not immediately available
What Can Break the Strategy
- Underestimating time and cost to stabilize
- Overleveraging at acquisition
- Assuming refinancing will be automatic
Quiet conclusion: Private capital should be used with intention—then replaced with permanent debt once the asset earns it.
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