The Deal: Fix And Flip in Ridgefield Park, NJ
The best part is that the borrower is not being charged interest on the construction part of the loan until using it. It basically serves as a backup of funds for him to draw from as renovation continued, in case he needs to close on a new deal in a competitive market.
Today’s deal comes from Zak Blechman, who closed this hard money cash out & rehab loan in Ridgefield Park, NJ. The property was purchased for $312,500 with a renovation budget of $176,000 and a total loan funded at nearly 80% LTC. The borrower is a professional real estate investor that averages one deal a month and had not worked with ABL previously.
Initially the borrower was looking for bridge financing to complete repairs on a home, but after understanding the borrower’s business model Zak realized they were undercapitalized for potential upcoming deals. ABL worked to structure the loan as a cash out so the borrower could immediately recoup expenses on the property purchase and use the funds to complete the renovation. They were also granted a large construction escrow to pull from to have reliable capital to reimburse their renovation costs.
The property is a 3-bedroom, 1-bathroom single-family detached measured at 1300 square feet and will be undergoing exhaustive renovations that will add an additional 850 square feet of living space. After renovations, the property will be a 5-bedroom, 2.5-bathroom house. The existing bathroom will be completely replaced, as will the kitchen. Walnut hardwood floors will be installed throughout the house, along with exterior updates such as a new roof and new vinyl siding. Two new HVACS will also be installed. Renovations are expected to take between six and seven months, with home sale expected within 60 days after completion.
Ridgefield Park NJ has become a lucrative spot for real estate investors, especially during the pandemic where many NYC residents looked to NJ suburbs for new permanent homes. As of February 2021, average home prices in the area reached $392,000 which marks a 17% increase from the previous year. While distressed properties are increasingly difficult to find, savvy investors with a network of connections can take advantage of these price increases by finding off-market deals. Currently homes in the area are selling for $269 per square foot which is a remarkable 28% increase from the year before. Builders and contractors that can source their own material for reduced costs could benefit from the ability to build a home that appeals to the market and sells for much more than the building costs. Typically homes in Ridgefield Park are receiving 25% as a down payment and are remaining on the market for an average of 108 days, which means investors should be prepared to hold the home for a little longer before the final sale occurs.
“There were multiple holdups with title which our processing team was able to mitigate so that we closed in time for the sellers to stay at bay, something very important in this climate,” said Zak. “At this time the investor is looking at multiple projects on the market and will have more than enough funds to leverage our capital again.” Thanks to Zak’s ability to understand the borrower’s needs and ABL’s flexible loan underwriting, our team was able to provide the best capital option for this borrower’s current and future investment projects. With a passion for understanding local real estate trends and helping deliver the most reliable hard money loans for real estate investments, Zak and the ABL team are ready to help both new and experienced investors achieve their next success. If you want to be approved for your hard money loan, contact us today.