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 deal each month, going through the details that made it a win and how our experts navigated the process.
The Deal: Refinance And Rehab In Sarasota Florida
Today’s deal comes from Paul Lewis, who closed this fix and flip loan in Sarasota, Florida. The property is a detached single-family home that was originally 3700 square feet, but through renovations increased to 3902. The property was purchased for $525,000 with a renovation budget of $385,000. The total loan amount came to $650,000 and includes refinancing of the property’s current mortgage. By the time ABL was contacted the borrowers had completed approximately 40% of home renovations using their own capital, so ABL was willing to increase the available funding to match the level of equity already placed into the property and reimburse the existing renovation costs. Renovations for the home include extensive gut renovations to redesign the interior such as a brand-new kitchen, brand-new bathroom, and brand-new living room. Other renovations include new windows, new roofing, and new central air conditioning throughout the home.
It is the borrower’s first time working with ABL. In this case, the borrowers are a group of three real estate investors that focus on buying and redeveloping luxury properties in the Sarasota area of Florida. They signed a purchase agreement to acquire the property in 2019 and agreed to service the property’s existing mortgage interest while also paying a flat sum to allow for renovations to begin before home vacancy. The borrowers were looking to refinance the mortgage and needed to close the deal quickly to avoid paying an additional $32,000 on their contract as well as preventing renovation delays. Paul and the ABL team worked diligently to put together an attractive loan offer that benefited both parties that closed just in time to save the borrowers a large sum of money, including allowing a draw inspection at the time of property appraisal to ensure renovations could remain funded and continue at their current pace. Unfortunately, both of ABL’s usual appraisers in the area contracted COVID during the time appraisal was needed. Thankfully, they are both recovering nicely, and ABL was able to find another appraiser to drive down from St. Pete to assess the property at the last minute, allowing us to close the deal and save the borrower from a large financial loss. Renovations are on track to allow the borrowers to have the property listed for sale by the middle of January 2021.
Sarasota has experienced tremendous real estate growth over the last year, which is a trend that most Florida counties are seeing as well. With COVID changing people’s work situations as well as altering what people look for in a home, Florida has seen a large population increase that includes people looking to purchase primary residences. According to Redfin, in October 2020 the median sale price for homes in Sarasota was $355,000 which is a tremendous 33% increase from the previous year. The average sale price per square foot is currently $191, which is a nearly 16% increase from the previous year. 700 homes sold during October 2020, marking a 27% increase from October 2019, and highlighting the area’s thriving real estate market. On average, homes in this area are staying on the market for 34 days and receive two offers before the final point of sale, giving home sellers a little bargaining power before closing their deals.
Paul’s Insights
Paul has continued working hard throughout 2020 to help our Florida borrowers- both new to ABL and repeat borrowers- secure deals quickly in a competitive real estate market. These investors would have had to pay tens of thousands of dollars as well as delay selling their asset if not for Paul’s ability to deliver an attractive loan offer in the nick of time, creating a new business relationship that ABL looks forward to continuing in the future. If you’re looking for a hard money loan for new construction or fix and flips in Florida, contact Paul today.