The bridge calculator: understanding your daily bleed and why it matters

Bridge loans are priced annually and consumed daily. That mismatch is why operators underestimate them.

Twelve percent sounds like a rate. $131 a day sounds like a meter running. Same number. The second one changes behavior.

The calculation

Daily carry = (Loan amount × Annual rate) ÷ 365

$400,000 at 12%: ($400,000 × 0.12) ÷ 365 = $131.51/day

Some lenders compute on a 360-day year, which raises the daily figure slightly — $133.33 in this case, and about $667 more over a six-month hold. Ask which convention applies; it's on the note.

A reference table:

Print it. Put it where you make scheduling decisions.

What a 30-day overrun costs

On the $400,000 example: $3,945.

That's what a contractor slipping a month costs you. Not "some delay" — $3,945, plus another month of taxes, insurance, and utilities on a property producing no rent. Realistically closer to $4,600 all-in.

Against a projected $85,000 profit on a flip, that's over 5% of the return, gone to a scheduling problem.

The compounding you don't see

Bridge interest is usually simple, not compound — you're not paying interest on interest. But the cost compounds in three ways people miss:

1. Extension fees. Most bridge loans run 6–12 months with extension options at a price — commonly 0.5% to 1% of the loan amount per extension. On $400,000, that's $2,000–$4,000 for the right to keep bleeding $131/day.

2. Draw schedules on renovation funds. If your rehab budget is disbursed in draws, you only pay interest on funds drawn — good. But draw inspections take 3–5 days each, and a contractor waiting on a draw is a contractor not working, which extends the hold, which costs $131/day. Front-load your draw requests.

3. The DSCR exit isn't instant. Your bridge doesn't stop the day the last tenant signs. The refinance takes 14–21 days from application, and the appraisal alone is 7–10 business days. Start the DSCR underwrite while the rehab is finishing, not after. That parallel step is worth 2–3 weeks of carry — roughly $2,600–$3,900 on the example loan.

Interest reserve vs. out-of-pocket

Two ways bridge interest gets paid, and they feel completely different:

Interest reserve. The lender holds back several months of interest from the loan proceeds and draws payments from it. You make no monthly payment. Convenient — but you're borrowing your own interest, you pay interest on the reserve, and it reduces the cash you receive at closing. It also hides the bleed, which is exactly the wrong psychological effect.

Out-of-pocket monthly. You pay $4,000/month from your own account. Less convenient. Far better for decision-making, because you feel it, and feeling it makes you call the contractor.

If you're disciplined, take out-of-pocket. If your cash is tight and the reserve is what makes the deal work, take the reserve — but put the daily number on the wall anyway.

Modeling the full bridge cost

For a six-month hold on $400,000 at 12%:

That's the number that belongs in your deal model. Not "12%." Nearly $40,000, which is roughly 10% of the loan amount for six months of use.

If that's uncomfortable, it should be. Bridge capital is expensive, and the correct response is to spend as few days in it as possible — which is the whole reason the exit product matters as much as the bridge itself.

Three rules

1. Compute your daily number before you close, and tell your contractor what it is. "Every day costs me $131" is a more effective schedule conversation than "please hurry."
2. Start the DSCR exit at 75% rehab completion, not at 100%. Appraisers can work around a punch list.
3. Model 30 days of slack and treat beating it as upside. A deal that only works if nothing slips is a deal that doesn't work.