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: Cash Out & Rehab In Landenberg, PA
Today’s deal comes from Scott Davis, who closed this hard money fix and flip loan in Landenberg, PA. The property is a single-family detached that was purchased for by the borrower in cash for $220,000. The borrower came to ABL seeking to pull some cash out from their equity in the property as well as finance the $182,000 renovation budget. ABL’s total loan was $232,000 which included 100% rehab funding and $50,000 cash out. The borrower’s exit strategy is to sell the property with an estimated ARV of $530,000.
The property is a 3500 square foot 4-bedroom, 3.5-bath single family detached home that will be undergoing extensive renovations. Previous owners did not keep up with average house maintenance and repairs, making the project more difficult than the typical fix and flip situation. The kitchen and baths will be completely gutted and built back up with mid-level finishes. Cosmetic upgrades will include new floors, fresh coats of paint throughout the home, and replacing the existing windows. A new septic system will be installed as well. Renovations are set to take approximately 60 days and be up for sale on the market immediately after.
This property is located in a unique area- an Amish congregation where the Amish do most, if not all, of the building and renovating. The Amish workers are transported to the work sites via a small business that specializes in providing motor vehicle transportation for Amish people, which is all setup through landline phones to remain in line with the Amish beliefs and lifestyle. Scott had to do extra leg work to find an appraiser that could reach the area, and the appraisal ended up being approximately $15,000 higher than the borrower was expecting.
The borrower is a business duo that have worked together and invested in real estate for decades, resulting in the sales of over 3,000 properties. Since they both held jobs as real estate agents and brokers respectively, they took a break from residential investments to avoid competing directly with any of their clients. Recently, with heavily increased activity in their local real estate markets, they realized there were enough investment properties available for everyone and decided to begin investing for themselves once again.
Landenberg PA is located in Chester County, an area that is experiencing similar housing market trends to the rest of the northeast with low inventory and rising average sale prices. According to Redfin, Landenberg and the rest of the 19350 area code has an average home sale price of $488,750 which is a 32% increase from the previous year. The number of homes that sold in the area for November 2020 were 12, which is a 33% increase from the previous November. Homes in the area stay on the market for an average of 38 days, which is a 59% decrease from 2019 and highlighting the hot local real estate market. As people continue to leave major cities and metro areas, suburban real estate markets like Chester County are seeing large increases that are expected to continue deep into 2021.
Scott has worked diligently throughout 2020 to continue helping ABL borrowers secure great real estate investments, despite the global pandemic. This borrower specifically had never used hard money lending before, and Scott showed him the long-term benefits of using ABL’s funding.
The borrower had never used hard money and was impressed with how easily we gave him the ability to complete his various jobs in quicker fashion and actually net more profit in the long run
“The borrower had never used hard money and was impressed with how easily we gave him the ability to complete his various jobs in quicker fashion and actually net more profit in the long run,” said Scott. By working with ABL to fund this fix and flip project, the borrower was able to free up their own cash to complete construction projects at the same time, resulting in a larger financial gain in a shorter amount of time. If you’re looking for hard money loans for new construction or fix and flips, contact Scott today.