Commercial refinancing represents one of the most impactful financial decisions a Bakersfield property owner can make, particularly in the current environment where loan maturities from 2023 and 2024 vintages create both urgency and opportunity. For owners of Bakersfield commercial properties, refinancing can lower interest costs, extract accumulated equity for reinvestment, restructure loan terms to improve cash flow, and transition from variable to fixed-rate debt for payment predictability.
Bakersfield's strong and improving commercial real estate fundamentals, including 3.6% multifamily vacancy, sub-8% office vacancy, surging industrial demand, and population growth of approximately 1.2% annually, create favorable conditions for refinance transactions. Properties that have appreciated since purchase or that benefit from improved market conditions may qualify for better terms than when originally financed.
This guide covers everything you need to know about commercial refinancing in Bakersfield, from loan programs and rates to cash-out strategies, timing considerations, and underwriting requirements.
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Why Is Now a Good Time to Refinance Commercial Property in Bakersfield?
Several converging factors make the current environment favorable for Bakersfield commercial property refinancing.
Interest Rate Opportunity exists for property owners who financed at the elevated rates of 2023 and 2024, when commercial mortgage rates reached their highest levels in years. Many Bakersfield property owners locked in rates of 7% to 8% or higher during that period. Current rates starting at approximately 5.08% for multifamily and 5.15% for commercial represent a meaningful reduction that can save thousands of dollars annually in debt service.
Property Value Appreciation across Bakersfield's key property types has created equity that did not exist at the time of purchase. Multifamily properties have benefited from tightening vacancy (3.6%) and rent growth of approximately 2% year-over-year. Industrial properties have appreciated as logistics demand surges along Highway 99 and in Shafter. Office values have stabilized as vacancy drops below 8%. This appreciation supports higher appraised values, enabling both better LTV ratios and cash-out refinancing.
Loan Maturity Management is critical for owners with commercial loans maturing in 2026 and 2027. Proactively refinancing before maturity gives you control over timing and lender selection, rather than being forced to accept whatever terms are available when the loan comes due. Many bridge loans and shorter-term commercial mortgages originated in 2023 and 2024 will mature in the coming 12 to 24 months.
Variable-to-Fixed Conversion protects against future rate increases. Bakersfield property owners with floating-rate loans tied to prime or SOFR can lock in fixed rates, providing payment predictability for 5 to 30 years depending on the program.
For an overview of all commercial financing options, explore our guide to commercial loans in Bakersfield.
What Types of Commercial Refinance Loans Are Available in Bakersfield?
Bakersfield's refinance market offers multiple programs tailored to different property types, borrower profiles, and refinancing objectives.
Agency Refinance (Fannie Mae/Freddie Mac) provides the lowest rates for multifamily properties with five or more units. Rates starting at approximately 5.08% with leverage up to 80% LTV and terms of 5 to 30 years make agency refinancing the most cost-effective option for stabilized Bakersfield apartment properties. Non-recourse terms protect borrowers' personal assets. Cash-out refinancing is available at slightly lower leverage (typically 75% LTV).
Conventional Commercial Refinance serves all property types with rates starting at approximately 5.15% and LTV ratios of 70% to 75%. Local banks and regional lenders with Kern County market knowledge often provide competitive terms for existing borrowers. Conventional refinancing works for multifamily, industrial, retail, office, and mixed-use properties.
CMBS Refinance provides non-recourse financing for larger properties ($3 million and above) with fixed rates of 5.50% to 6.75% and terms of 7 to 10 years. CMBS is particularly attractive for industrial and retail properties with long-term NNN leases and creditworthy tenants.
SBA 504 Refinance allows owner-occupants to refinance existing commercial debt with up to 90% financing and fixed rates starting around 5.50%. This program is exceptionally valuable for Bakersfield business owners who originally purchased with higher-rate conventional or SBA 7(a) loans and want to reduce their debt service costs.
DSCR Refinance qualifies based on property cash flow rather than borrower income, with rates of 6.00% to 8.50% and leverage of 75% to 80%. DSCR refinancing works well for Bakersfield investors with multiple properties, complex tax situations, or self-employment income that makes conventional qualification difficult.
Bridge-to-Permanent Refinance is the final stage of a bridge loan strategy, where a property that has been acquired and stabilized with short-term financing is refinanced into permanent debt at lower rates. This is particularly active in Bakersfield for multifamily value-add and industrial repositioning projects.
How Do You Decide Between Rate-and-Term vs. Cash-Out Refinance?
The choice between a rate-and-term refinance (purely to lower your rate or restructure terms) and a cash-out refinance (to extract equity) depends on your investment strategy and portfolio objectives.
Rate-and-Term Refinance makes sense when your primary goal is reducing monthly payments or locking in a fixed rate. If you financed a Bakersfield property at 7.25% in 2023 and can refinance at 5.50% today, the interest savings on a $3 million loan amount to roughly $52,500 per year. Rate-and-term refinancing qualifies for higher LTV (up to 80% for agency multifamily) and slightly lower rates than cash-out programs.
Cash-Out Refinance makes sense when you have accumulated equity and want to redeploy capital into additional investments. Bakersfield's appreciating property values, combined with NOI growth from rent increases and tightening vacancy, create equity that can be extracted tax-free (as loan proceeds rather than income). The extracted cash can fund down payments on additional Bakersfield properties, finance capital improvements that increase NOI, consolidate higher-cost debt from other sources, or provide reserves for future opportunities.
The trade-off with cash-out refinancing is a higher loan balance and slightly lower DSCR, since you are increasing debt against the same NOI. The key is ensuring the property still maintains a 1.25x DSCR (or 1.30x for some cash-out programs) at the new, higher loan amount.
Bakersfield's strong market fundamentals support cash-out refinancing because tight vacancy and rising rents provide a cushion against the higher debt service. An investor who extracts $800,000 in cash from a 40-unit apartment building refinance and uses that capital as a down payment on a second Bakersfield property effectively doubles their portfolio without additional outside capital.
Use our commercial mortgage calculator to model both rate-and-term and cash-out scenarios for your Bakersfield property.
What Does a Bakersfield Commercial Refinance Look Like in Practice?
The sample refinance above illustrates a typical Bakersfield apartment building cash-out refinance. An owner with a $2.8 million loan at 7.25% refinances to a $3.6 million loan at 5.50%, extracting $800,000 in cash while reducing the interest rate by 175 basis points. Despite the higher loan balance, the property's NOI of $438,000 supports a healthy 1.79x DSCR, well above the 1.25x minimum.
The $800,000 in cash-out proceeds can serve as the 25% down payment on a second Bakersfield multifamily acquisition worth approximately $3.2 million. This portfolio expansion strategy, funded entirely from existing equity, is one of the most powerful wealth-building tools available to commercial real estate investors.
The monthly payment increases by approximately $1,345, but the investor now controls two income-producing properties generating combined cash flow from roughly $8 million in real estate, having invested additional personal capital of zero dollars.
What Underwriting Standards Apply to Bakersfield Refinances?
Refinance underwriting in Bakersfield follows the same general principles as acquisition lending, with some additional considerations.
DSCR Requirements are typically 1.25x for rate-and-term refinancing and 1.25x to 1.30x for cash-out. Bakersfield's tight vacancy and strong rents mean most stabilized properties comfortably exceed these thresholds. A 40-unit apartment building generating $438,000 in NOI supports significant debt levels before approaching the DSCR floor.
LTV Maximums vary by program and refinance type. Agency multifamily: 80% for rate-and-term, 75% for cash-out. Conventional commercial: 75% for rate-and-term, 70% for cash-out. CMBS: 70% to 75%. SBA 504: up to 90% for owner-occupied. The property's current appraised value, reflecting any appreciation since purchase, determines the maximum loan amount.
Seasoning Requirements may apply, particularly for cash-out refinancing. Some lenders require the property to have been owned for at least 6 to 12 months before allowing cash-out. Agency programs may have different seasoning requirements depending on the specific product.
Prepayment Penalty Analysis on the existing loan is critical. Many commercial mortgages carry prepayment penalties (yield maintenance, defeasance, or step-down structures) that can cost 1% to 5% of the outstanding balance. These costs must be factored into the refinance cost-benefit analysis. If the existing loan has a high prepayment penalty, it may make sense to wait until the penalty period expires or reduces.
Environmental and Property Condition assessments may be required, particularly if the original loan was originated more than 3 to 5 years ago. Bakersfield properties near oil operations or agricultural land may require updated environmental evaluations.
When Should You Consider Refinancing Your Bakersfield Commercial Property?
Several triggers indicate that refinancing may be financially advantageous for Bakersfield property owners.
Rate Differential of 100+ Basis Points: If your current rate exceeds available rates by 1% or more, the interest savings likely justify refinancing costs. On a $3 million loan, a 150 basis point reduction saves approximately $45,000 per year.
Loan Maturity Within 12 to 24 Months: Proactive refinancing gives you time to shop for the best terms rather than being forced to accept available rates at maturity. This is particularly important for bridge loans and shorter-term commercial mortgages originated in 2023 and 2024.
Significant Property Appreciation: If your Bakersfield property has increased in value due to market appreciation, rent growth, or improvements you have made, refinancing unlocks that equity for reinvestment.
Variable Rate Exposure: If you hold a floating-rate loan and want payment certainty, refinancing to a fixed rate eliminates rate risk for the remainder of the loan term.
Portfolio Expansion Goals: If you want to grow your Bakersfield real estate portfolio but lack the capital for additional down payments, cash-out refinancing provides the investment capital without selling existing properties.
Prepayment Penalty Expiration: If your existing loan's prepayment penalty has expired or reduced to an acceptable level, the cost barrier to refinancing has been removed.
What Refinance Options Exist for Specific Bakersfield Property Types?
Each commercial property type in Bakersfield has distinct refinance characteristics based on asset class fundamentals and lender preferences.
Multifamily Refinance benefits from the most favorable terms in Bakersfield. Agency programs (Fannie Mae/Freddie Mac) offer rates from 5.08% with up to 80% LTV. Bakersfield's 3.6% vacancy and $1,580 average rent create strong DSCR ratios that support maximum leverage and minimum rates. Cash-out refinancing of appreciated multifamily assets is the most common strategy for portfolio expansion.
Industrial Refinance has become increasingly attractive as property values appreciate with surging logistics demand. Stabilized warehouse and distribution properties along Highway 99 and in Shafter qualify for conventional refinancing at 5.15% to 6.00% with 75% LTV. NNN-leased properties with creditworthy tenants receive the best terms.
Retail Refinance at cap rates around 7.0% creates properties with strong DSCR ratios that support competitive refinance terms. NNN-leased retail with national tenants qualifies for the lowest rates. Multi-tenant retail with local operators may see slightly higher rates.
Office Refinance benefits from Bakersfield's improving vacancy metrics. With vacancy below 8%, lenders are more willing to offer competitive refinance terms than in larger metros struggling with 20%+ vacancy. Properties along Stockdale Highway and Rosedale Highway with diversified tenant rosters receive the best treatment.
Explore our commercial refinance guide for additional details on refinancing strategies.
Frequently Asked Questions About Commercial Refinancing in Bakersfield
What are current commercial refinance rates in Bakersfield?
Commercial refinance rates in Bakersfield start at approximately 5.08% for agency multifamily refinancing and 5.15% for conventional commercial refinancing. CMBS rates range from 5.50% to 6.75%. SBA 504 refinance rates start around 5.50%. DSCR refinance rates range from 6.00% to 8.50%. Actual rates depend on property type, LTV ratio, DSCR, loan size, and the specific refinance program. Multifamily and industrial properties generally receive the most competitive rates.
How much cash can I extract in a Bakersfield commercial refinance?
Cash-out proceeds depend on your property's current appraised value and the maximum LTV allowed by the refinance program. Agency multifamily cash-out allows up to 75% LTV. Conventional commercial cash-out typically allows 70% LTV. The cash extracted equals the new loan amount minus the existing loan payoff and closing costs. For a Bakersfield apartment building appraised at $5.2 million with a $2.8 million existing loan, a 75% LTV cash-out refinance at $3.9 million would generate approximately $1.1 million in cash proceeds.
What are the costs of refinancing a commercial property in Bakersfield?
Refinancing costs typically total 1% to 3% of the new loan amount. Common costs include origination fees (0.5% to 1.0%), appraisal ($3,000 to $7,000), environmental assessment ($2,500 to $5,000), legal fees ($3,000 to $10,000), title insurance, and recording fees. The existing loan's prepayment penalty, if applicable, can be the largest refinancing cost and should be evaluated carefully before proceeding.
When does it make sense to refinance a Bakersfield commercial property?
Refinancing typically makes financial sense when available rates are at least 100 basis points below your current rate, your existing loan is maturing within 12 to 24 months, significant property appreciation has created extractable equity, your current loan has a variable rate and you want fixed-rate certainty, or the existing loan's prepayment penalty has expired or reduced to acceptable levels. The break-even point, where cumulative interest savings exceed refinancing costs, should be calculated for your specific situation.
Can I refinance a Bakersfield property with a DSCR loan?
Yes, DSCR refinance loans are available for Bakersfield investment properties with rates starting at approximately 6.00% and LTV ratios up to 75% to 80%. DSCR refinancing qualifies based on the property's cash flow rather than your personal income, making it ideal for self-employed investors, agricultural business owners, and those with complex tax situations. Given Bakersfield's strong rental market, most stabilized properties easily exceed the 1.25x DSCR minimum. Use our DSCR calculator to evaluate your property.
How long does it take to refinance a commercial property in Bakersfield?
Refinancing timelines range from 21 to 90 days depending on the loan program. DSCR refinances close in 21 to 45 days. Conventional commercial refinances take 45 to 75 days. Agency multifamily refinances require 45 to 60 days. CMBS refinances take 60 to 90 days. SBA 504 refinances require 60 to 120 days. Starting the refinance process early, particularly if your existing loan is maturing, gives you adequate time to compare programs and negotiate the best terms. Contact Clearhouse Lending to begin your refinance evaluation.
How Can You Optimize Your Bakersfield Commercial Refinance Strategy?
Commercial refinancing is one of the most powerful tools available to Bakersfield property owners for improving portfolio economics, extracting accumulated equity, and positioning for growth. The city's strong fundamentals, including 3.6% multifamily vacancy, sub-8% office vacancy, surging industrial demand, and population growth leading the state, create properties with the income profiles and appreciation trajectories that support favorable refinance terms.
Whether you are lowering your rate on a multifamily portfolio, extracting cash from an appreciated industrial property to fund your next acquisition, converting a maturing bridge loan to permanent debt, or transitioning from variable to fixed-rate financing, the right refinance structure can meaningfully improve your cash flow, reduce risk, and accelerate portfolio growth.
Contact Clearhouse Lending to connect with refinance lenders who specialize in Bakersfield and Kern County commercial properties and receive customized rate quotes for your portfolio.