Asset Based Lending is proud to celebrate our borrower’s successful real estate investments and our loan officers who facilitate that success. ABL will be highlighting our loan officers’ favorite deals each month, going through the details that made it a win and how our experts navigated the process.
The Deal: New Construction in East Hampton, NY
Today’s deal comes from Nik Gak, who closed this hard money new construction loan in East Hampton, NY. The parcel of land was purchased over ten years ago for $450,000 and the construction is set to be a luxury single-family detached residence. The total loan amount came to approximately $1.1 million and was funded at 79% LTC. The borrower’s exit strategy is to sell the home with an estimated ARV of $2.1 million.
The borrower is a first-time borrower that consists of two partners: one of them focuses on the construction side and the other focuses on the investment side. These partners have worked together on dozens of successful residential new construction projects over the years, focusing on similar luxury builds to this one. With 50 years of construction experience and 40 years of investing experience, this duo was given an exception to ABL’s typical loan cap for first-time borrowers due to their proven track record of well-designed homes with strong economics.
The home is set to be a luxury single-family detached measured at approximately 3,750 square feet with 5-bedroom, 5.5-bath. Home will have a sleek, modern design and will be highlighted by an open floor plan with white oak floors, large windows, and 10-foot high ceilings. Kitchen will be large and luxurious with a 4-person island, high-end appliances, and custom Italian cabinets. Each bathroom will have its own unique style of tiles and will all use high-end finishes. One of the bedrooms will be designed in a way that facilitates it being used as an office, home gym, or other non-bedroom room. Home will include an outdoor pool. Construction is set to take between 8 and 10 months.
Local Market Statistics – East Hampton, NY
East Hampton New York is an affluent real estate market filled with luxury homes that are used as either primary residence or vacation homes. As of October 2020, the average sale price for homes in the area is $4 million, which is an astounding 74% increase in price from 2019. Currently new construction homes are selling for $1,000 per square foot, which is a nearly 53% increase from the previous year. The high price point means homes stay on the market for an average of 138 days and typically sell for 10% less than the initial asking price. That said, the substantial price increase is being caused from the change occurring in the nearby real estate markets. The shifting of lifestyles from urban-focused to suburban-focused, as well as the exodus of New York City, has meant many wealthy socialites are looking for primary residences in the tristate area. While these prices may fluctuate in 2021 and eventually taper off, the area is currently a hot market for investments like residential new construction.
Nik continues to work tirelessly, maintaining strong relationships with his borrowers and ensuring their ability to continue real estate investments despite the global pandemic. He especially loves introducing new borrowers to the ABL system and showing them how seamless the process is.
“I very much enjoyed discussing the construction details with the developer. I helped them navigate ABL’s loan process by acting as a competent liaison between them and the numerous third parties involved in a real estate transaction.”
“I very much enjoyed discussing the construction details with the developer. I helped them navigate ABL’s loan process by acting as a competent liaison between them and the numerous third parties involved in a real estate transaction.” His interest in our borrower’s incredible projects, as well as in the finer details of a hard money loan, has contributed to the continued success Nik and his borrowers have enjoyed during 2020. If you’re looking for a hard money loan in NY for new construction or fix and flips, contact Nik today.