Hard money loan for New Construction loan in Topsail Bach, North Carolina
Asset Based Lending’s Loan Officer, Sam Oster, recently closed a new construction deal in Topsail Beach North Carolina. Sam specializes in Georgia lending but provides expertise to all the Southeast states. Sam started his journey on the draws and operations team, later transitioning to the Loan Officer position. He loves working with experienced investors on new construction and fix and flip projects and has a deep understanding of the territory in which he is focused.
Sam worked with an experienced real estate developer in North Topsail Beach to fund a new construction project developing a community of eight beachside properties, each with four bedrooms and three bathrooms. The borrower came to ABL with experience having completed more than fifty in the last three years, including multiple projects in this area and similar in scope of work.
Prior to reaching out to ABL for a new construction loan, the borrower purchased a large parcel of land and subdivided it into eight lots. All work to subdivide, zone, obtain appropriate permits and titles, and complete state required environmental work was done with the borrower’s own capital. Once these initial steps were completed, the borrower was in a good position to obtain a hard money loan and begin construction.
With these improvements to the land already made, ABL was comfortable offering more leverage for this blanket loan. The total loan amount was $1,560,000, with $1,350,000 being dedicated to construction. Even though the recorded sale price of the land was lower than the as-is value at the time the loan was underwritten, the borrower invested a significant amount of their own capital to prepare the land for construction which positively contributed to the land’s as-is value.
To cover the construction cost of five new luxury single family home builds, Asset Based Lending offered the borrower the option of using a blanket loan instead of financing each property individually. Utilizing a blanket loan for this new construction project was beneficial to the borrower because having multiple properties covered under one loan means the borrower is incurring fewer fees. If the borrower had chosen to cover each property individually, they would have had to pay the legal and processing fees, among others, for each property.
Our experienced loan officers recognize these kinds of charges can become onerous during the loan process. Having the forethought to work with the borrower to make the lending process as simple and financially efficient as possible is one way we nurture our borrower relationships.
The borrower’s focus for this project revolved around quick closing and seamless draw process. While the loan term was scheduled for 15 months, the borrower’s goal was to have construction completed within 10 months and then list them for final sale. With previous projects like this, this borrower typically sells the completed homes to short-term rental property investors looking to scale their business.
Typically, ABL offers new construction loans for a twelve-month period. However, as balance sheet lenders, we can look at each deal on a case-by-case basis and agree on a timeline based on the project’s needs. For this project, we adjusted the loan term from 12 months to 15.
When working with experienced real estate developers like this, it is no surprise that they can secure financing from many different hard money lenders. For previous projects this borrower was successfully funded by other hard money lenders in the industry. Coming to ABL after working with other lenders, this borrower’s priorities were fast closing and smooth draws. With ABL as their lender, and Sam as their partner on this deal, these goals were well within reach. Once the borrower accepted the loan terms, Sam and the team closed this loan in less than two weeks.
The estimated ARV for one property under this blanket loan comes in at $1,245,000, making the total amount in profits expected to be approximately $2,490,000 for the entire portfolio. To get the most for their asking price the borrower is planning to construct a two-level home with covered parking for four cars. The first level will be the main suite with an ocean view, ensuite bathroom, laundry space, and hot tub. All countertops in the bathrooms as well as the kitchen will be granite or quartz. The second-floor plans include an open concept kitchen and living space, three additional bedrooms, and two bathrooms. As of August 2023, homes in Topsail Beach can sell for as much as $1,750,000 and can collect as much as $12,500 a week in rent during the peak season.
For more information about acquiring hard money for your fix and flips, new construction, or term rental loans, contact Sam today.