The Deal: Fix And Flip in Jersey City, NJ
Today’s deal comes from Susan Botros, who closed this hard money fix and flip loan in Jersey City, NJ. This three-unit multi-family property was purchased for $450,000. The total loan amount came to $416,000 and was funded at 80% LTC. Renovation costs are budgeted at $65,000. The borrower’s exit strategy is to refinance using ABL’s rental loan refinancing and continue holding the property as an income-producing asset.
“They both learned the business and started knocking on doors of owners with mortgages that are past due. They found their first deal in Plainfield and did several cosmetic flips with us.”
“They both learned the business and started knocking on doors of owners with mortgages that are past due. They found their first deal in Plainfield and did several cosmetic flips with us.” These borrowers have had multiple successful real estate investments since then and are now entering into the rental market to begin generating passive income.
The property has three separate units- two are up to code and the third will be brought up to code with the addition of a sprinkler system and second set of stairs, so all three units can be rented. The first two units are 3-bedroom, 1-bathroom and the third unit is a 2-bedroom, 1-bath with a combined total square footage of 3800. Masonry throughout the property will be repaired and electrical wiring will be updated in each unit. The second and third units will undergo gut renovations for their kitchen and bathroom, as well as receive new lighting and updated floors. The estimated time for renovations to be completed is 3 months.
Jersey City is experiencing a boost to its real estate market, especially with New Yorkers seeking cheaper alternatives in nearby cities. Properties in the area are selling for $585,000 on average, marking a 10% increase from this time last year. Homes are remaining on market for an average of 42 days and typically receive about 16% of the asking price as a down payment. November saw 156 homes sell and each home on average received two separate offers, leaving sellers a little leverage for negotiations. The rental market took a slight hit due to the pandemic, with average rent in Jersey City dropping by 1.8% from the previous year, but the average rent price for the city remains at a very healthy $2,970. Downtown JC and The Waterfront remain the highest priced rental neighborhoods in the city, but the remaining neighborhoods like Journal Square and West Side have all evened out to be within a couple hundred dollars of each other for average rent prices.
Susan is a favorite among borrowers due to her excellent work ethic and ability to understand the investors’ needs. She loves when the finished product is something to be proud of- a good deal financially for the investor as well as an improvement to the local real estate. She hopes to work with these borrowers again, stating, “They’re both young investors that have an eye for good deals and providing an exceptional product. Out of all the deals we fund, I’d say they are one of our top borrowers when it comes to quality of work.” If you’re looking for a hard money loan for fix and flips, new constructions, or rental property, then contact Susan today.