The Deal: Refinance & Rehab in Somerville, MA
Today’s deal comes from Michael Chadwick, who closed this hard money refinance & rehab loan in Somerville, MA. The property was purchased for $1,560,000 with a renovation budget of $1,000,000 and a total loan funded at nearly 75% LTC. The borrower is an experienced contractor that is working with ABL for the first time.
“Given the prohibitive cost of new construction, there is a HUGE market for condo conversions in the Boston area,” said Chadwick.
The property was purchased for $1,560,000 with a renovation budget of $1,000,000 and total loan funded at 75% LTC. The plan is to completely gut the current 4-unit condominium, which is divided into two buildings, transforming the interior and exterior into nearly new buildings while adding a 5th unit to the property. After construction is complete the combined property bed and bath count will be 12-bedroom, 12-bath measured at a total 6,170 square feet. Both buildings will receive new electrical, new plumbing, and new sprinkler system. Exterior updates will include a new roof, new windows, new doors, and a new outdoor deck for each unit. Construction is expected to take approximately nine months and the borrower will sell the property within three months of project completion.
Somerville MA is one of the many areas surrounding Boston that saw a surge in their real estate market after the mini exodus from cities that occurred. Currently the Somerville rental market has remained strong throughout the pandemic, with well over 50% of the residents continuing to rent their home rather than own. The town also has the second highest monthly rent rates in the state, meaning buy and hold investors that want to begin or grow their Somerville rental portfolio can take advantage of the market conditions with the steady monthly income rental property can provide. With inventory being so low in the area, builders and contractors can also benefit by filling inventory gaps with residential new construction. As of February 2021, homes in the area were selling for $620 per square foot, marking a 6% increase from the year before. By sourcing materials directly in order to reduce construction costs and designing the build to meet market demands, contractors can make the most of the Somerville market. On average homes are remaining on the market for 43 days, meaning investors could potentially chain together several deals over the year and walk away with a significant profit.
“The ABL team and I are confident that the borrower will deliver a top-notch product and expect this will be the first of many loans with the borrower in the years to come,” said Chadwick. Michael Chadwick is our regional New England expert, focusing his efforts on helping borrowers finance deals in Massachusetts, New Hampshire, and Rhode Island. With his years of experience in these markets and the flexible loan options that ABL provides, Mike Chadwick is ready to help investors finance their next success. If you’re ready to be approved for your hard money loan, then contact us today.