Multifamily Property Purchase in St. Joseph Missouri
Michael Chadwick is Asset Based Lending’s Vice President and Area of Manager for New England. He joined ABL in 2020 with 20 years of real estate and financial services experience. As a real estate investor himself, Mike brings his in-depth knowledge and experience to all his interactions with ABL borrowers.
Mike recently funded the purchase of a $4.5MM multifamily property in Kansas City, Missouri for a stellar repeat borrower. For this deal, the borrower was working with another lender to secure funding, but their experience working on this deal was less than exemplary and, ultimately, led them back to ABL to close on this loan.
After a period of radio silence from the original lender, the deal began falling apart. When the borrower contacted Mike it was clear that this project necessitated a level of creativity that a traditional mortgage company and even most private money lenders cannot accomplish. As balance sheet lenders, ABL operates with a higher level of flexibility and nuance, meaning we can take on some risk to fund great opportunities and projects that don’t fit in the typical box.
This borrower brought to the table an exceptional credit history, high level of liquidity, and experience completing many projects with a similar scope of work. These factors together indicated to Mike and the rest of the ABL team that this deal showed potential to be profitable for both the borrower and ABL.
When Mike reviewed this deal, he analyzed the situation and took all the details into consideration. With the buyer having a great track record, having worked with ABL before, and this property already having a DSCR of 1.28 at the original rental metrics, Mike knew it was worth trying to get this deal approved. But he first had to get the Underwriter, as well as the CEO’s approval to encroach on the maximum loan amount.
The scope of work for this project entails stabilizing the multifamily property to bring each unit’s rent up to the current market rate, then converting the units to Section 8 housing. The borrower expects to complete this project within the 18-month loan term, including getting approval from the local housing authority for the Section 8 conversion. Once the project is complete, the borrower will refinance the property into a DSCR loan and hold this as a rental property in their portfolio and collect monthly passive income.
For this project Mike knew the borrower’s priorities were reaching the right loan amount and getting the deal closed quickly. To achieve these goals, Mike had to sell our internal Underwriting team as well as our CEO on this deal which approaches our max loan amount. The loan was sized to 67.5% loan to value, making the total loan amount $3.2MM.
ABL rewards and appreciates experience, so this borrower who has completed 6 round trips with ABL and paid off over $4MM worth of prior loans was an ideal candidate for creative and flexible loan structuring. The borrower also presented our Underwriting team with an exceptional credit history and FICO of 700+, as well as more than $1MM in liquidity.
Ultimately, our Underwriting team was comfortable moving forward given this borrower’s successful track record and strong understanding of this market. The last hurdle was moving as quickly as the borrower required.
Once Mike received the green light to take this deal on, our internal teams hit the ground running. The ABL Processing and Closing teams didn’t miss a beat collecting all the necessary documentation and keeping track of all third-party attorneys and appraisers, ensuring this tight timeline was kept.
From the day Mike Chadwick entered this loan in ABL’s system as a stabilized bridge loan, to the day the loan closed, totaled two business days. Without the speed and efficiency of ABL’s Leadership, internal Underwriting, Processing, and Closing teams working together towards the common goal of closing this loan, it is certain this borrower would have lost this project.
To be exceptional in the space of private money lending it is required that lenders remain flexible in addressing the needs of borrowers, especially in a market as volatile as it is today. Mike Chadwick and ABL’s internal Underwriting, Processing, and Closing Teams took on a challenge to close on this $4.5MM multifamily property in Kansas City, Missouri, and worked seamlessly to ensure they stayed on the mark. For the borrower, that directly translates to an expanding portfolio, growing profits, and a deeper appreciation for Asset Based Lending’s outstanding teams of lending partners.