The Deal: Land Purchase & New Construction in Philadelphia, PA
Today’s deal comes from Zak Blechman, who closed this land purchase & property new construction hard money loan in Philadelphia, PA. The parcel of land was purchased for $180,000 with a construction budget of $391,000 and a total loan funded at 83% LTC. The borrower is an experienced real estate investor that is working with Asset Based Lending for the first time as well as working on their first new construction project.
We closed in a legitimate seven-day period. Not seven business days, seven days from start to finish, including the appraisal, processing, and underwriting
The borrower is a real estate developer had been speaking with Zak about potential deals for over a year before landing on one that worked for both parties. Normally ABL does not lend on first time new construction projects, but the borrower’s extensive previous investing experience combined with the financial details of this deal allowed for the exception. One of the most important aspects of this deal for the borrower was the closing speed, as they only had eight days to close without losing the opportunity. “We closed in a legitimate seven-day period. Not seven business days, seven days from start to finish, including the appraisal, processing, and underwriting,” said Zak.
The proposed build is a three-unit residential building with two units being a 1-bedroom, 1-bathroom and one unit being a 2-bedroom, 1-bathroom measured at a combined square footage of 3,423. The building exterior will consist of brick façade, flat rubber roof, and Anderson 100 windows. Interior highlights will include hardwood floors, 10-foot-high ceilings, and baseboard molding. Kitchens will feature above-grade cabinets, granite or quartz countertops, and mid-range stainless steel appliances. Bathrooms will use ceramic tile flooring and baths with high-quality vanity.
Construction is expected to take approximately six months and the borrower is expecting to sell each unit before the project is complete.
About Philadelphia Pennsylvania
Philadelphia has been a hot bed of real estate in the last few years and was one of the few major cities in the north east to benefit from the residential shifts from 2020. As of April 2021, the average price for homes in the area reached $265,000, which is a nearly 8% increase from the previous year. Impressively there were over 1,370 homes sold during the month of March, representing a nearly 32% increase in home sales from the year before. The average time homes are spending on market is 38 days, which is 5% less than the previous year and indicates a strong seller’s market. With housing demand continuing to rise but inventory remaining in all-time low numbers, new construction is currently able to thrive in this market. Philadelphia’s rental market managed to maintain over the last year, seeing only a 1% decline in average rent prices compared to other tristate cities experiencing up to 5% drops. Over 45% of the population rents, with nearly half of the rental opportunities charging less than the national average, which contributes to the city’s low vacancy rate and makes it a stable option for buy and hold investors.
Zak is proud of the ABL team’s effort to come together and close deals quickly when it counts, delivering a five-star experience to every single borrower. “This was a new investor to us. Not even someone with whom we have previously done a deal and we still made it happen in that time frame.” Zak covers the New Jersey and Connecticut markets, constantly researching market conditions to better understand the local real estate to help borrowers secure profitable deals. If you’re looking for hard money loans for fix and flips or new construction, or are interested in our term rental loans, then contact Zak today.