New Construction Featured Deal in Nashville, Tennessee
Greg Dietz, Asset Based Lending’s Vice President of Lending in Tennessee, recently closed a cash out and new construction loan in Nashville Tennessee. Greg worked with a new borrower and experienced real estate investor to fund a single-family ground-up project located on the rear of a subdivided property. This borrower already completed a new unit on the front of the property, which was funded by another lender.
Prior to this borrower starting their single-family new construction projects, they purchased a vacant lot using cash. After closing the vacant lot, the borrower worked with the city to rezone the property to allow for the completion of two ground-up construction projects.
Constructing two units sharing a single lot has become common practice in Nashville. These property types are known as Horizontal Property Regimes, and many builders in Nashville are using this strategy as properties become scarce. By converting a single lot into an HPR, many builders can potentially double their profits on new construction projects and provide the city with much needed housing.
HPRs are typically modest, with this unit sized at 775 square feet and featuring a back deck and front porch. Plans for this unit include two bedrooms and one bathroom with vinyl siding on the exterior.
The interiors will be finished with builder grade materials including luxury vinyl plank flooring throughout, and standard baseboards. The kitchen plans include shaker cabinets, quartz countertops and stainless-steel appliances. For the bathrooms the borrower will use tile for flooring, full-size walk-in shower, and a single vanity.
Since the borrower completed the process to divide the land, the total land purchase price was split in half and brought down to $80,000. The borrower’s loan amount came to $211,000, of which they plan to use $155,000 for the construction of this property.
As of Q4 2023, the median sold price for a two-bedroom single family home in Nashville is $395,000, up 4% from this time last year. On average, homes in Nashville were listed for 28 days before final sale, making it a seller’s market. The city’s low cost of living and local amenities draws new residents each year and are creating a competitive market.
This borrower intends to list this unit for final sale once construction is complete. For the rear unit covered under this loan, construction is expected to last 6 months. The after-repair value for the rear unit is estimated to be around $340,000, and the front property sold in September 2023 for $395,000.
Greg has been helping real estate investors with Asset Based Lending since 2023. He previously worked in private equity where he oversaw more than $3 billion in real estate transactions. He has experience representing buyers and sellers of commercial real estate, which made for a seamless transition into his position at ABL.
To learn more about Asset Based Lending’s New Construction Loans, or to work with Greg on potential deals in Tennessee, get qualified today.