Bridge Loan for 86-Unit Motel to Multifamily Conversion in Cincinnati, Ohio

Funded by Real Property Investment Partners

$1,500,000

Deal Details

Private Loan Type

Residential Rehab

Approx. Funding Date

10/13/2022

Property Type
Motel
Multifamily
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 Highlights

Repeat Borrower who understands how to execute complicated deals.
Motel to multifamily conversion.
Less than 50% LTV.
Helping the community with blight and bringing the property back to life.

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.

Funded By

Real Property Investment Partners

NO APPRAISAL REQUIRED. Providing institutional-grade lending with a local presence.