Deal Details
Private Loan Type
Residential Rehab
Approx. Funding Date
10/13/2022
Property Type
Property City
Cincinnati
Property State
OH
Loan Term (months)
12
Lien Type
1st and 2nd
Payment Type
Interest Only
Purchase Price
$2,305,613
Loan-to-Purchase Price
65%
Borrower's Contribution to Purchase
35%
Source of Borrower's Contribution
Cash
Renovation Budget
$200,000
Renovation Budget Funded
100%
Borrower's Contribution to Budget
0%
After-Repair Value
$4,000,000
Loan-to-After-Repair Value
50%
Renovation Project Scope
Light Rehab
Location Type
Urban
Property Condition
Fair
Occupancy at Closing
Vacant
Number of Units
86
Lot Square Footage
157,861
Lot Acreage
3.62
Borrower's Plan
Rehab and Rent
Exit Strategy
Refinance
Borrower Credit Rating
Excellent
Interest Rate
12%
Origination Points
2%
Deal Summary
Real Property Investment Partners, a direct private lender, funded a $1,500,000 1st and 2nd lien position bridge loan for the acquisition of an 86-unit motel in Cincinnati, OH. We funded 65% of the $2,053,613 purchase price and 100% of the $200,000 renovation budget, while the Borrower contributed 35% cash to the purchase at closing. The after-repair value was $4,000,000 so our loan-to-ARV was 50%. Allowing for a 10% vacancy, monthly NOI was estimated to be $23,130 after debt service and all expenses, once stabilized and refinanced. The property would still have cash flow with as much as a 40% vacancy. A conservative valuation at an 8-cap rate was $3,469,620.
The Borrower intends to convert the subject property into studios. They plan to lease the property upon completion of the light rehab and eventually refinance as an exit strategy. The scope of work was relatively light– adding kitchenettes into each unit, completing flooring on the stairs, and some minor repairs in and around the property. The Borrower had excellent credit and was a highly experienced real estate investor with an extensive rental portfolio. They will be putting close to $1M towards the property and requested $1.3M dollars in funding. The interest rate was 12%. We charged 2% origination points. The property is approximately 157,861 square feet set in a 3.62-acre lot and was vacant at closing. The loan term was set at 12 months. This CRE bridge loan was funded in October 2022.
We liked this deal for a number of reasons:
- The area was experiencing tremendous development that yielded robust rent growth.
- As interest rates rise, the affordability of homeownership has gotten worse, and people have therefore been turning to rentals yielding strong rent growth across the board.
- The Borrower is one of our most experienced clients that has an impeccable track record. He has already executed 12 deals with us and has delivered incredible results.
- The foreclosure acquisition is at an extremely low basis at under $24,000 a door.
- The Borrower was putting in a tremendous amount of capital himself which shows his determination to perform and his willingness to put a sizable amount of capital of his own at risk.
- We would be lending at just 56.43% Loan-to-Cost and at 37.47% LTV. This is assuming a very conservative approach at a 10% vacancy and an 8-Cap valuation. The Borrower is confident that given the lack of supply rentals in the market, he will be able to have a smaller vacancy as well as a better valuation.