60%
Loan to Value
$1,358,725
Total Loan
Simon
Rishty
Breaking Ground and Shattering Norms with a Contractor's Vision
Case Study I Fix & Flip
Discover how a visionary investor, faced with daunting financing roadblocks, unlocked the secret to transforming a risky duplex project into an astonishing success story.
60%
Loan to Value
$1,358,725
Total Loan
Simon
Rishty
The Stats
$1,358,725
Total Loan Amount
11.99%
Interest Rate
60%
Loan To Value
84.5%
Loan To Cost
58%
ARLTV
The Stats
$1,358,725
Total Loan
Amount
11.99%
Interest
Rate
60%
Loan To
Value
84.5%
Loan To
Cost
58%
ARLTV
Overview
Loan Program Used
Fix & Flip
Closing Date
December 12th 2024
Location
Queens, NY
Property Type
Single Family
Goals
Refinance and Fix & Flip to elevate property value significantly
3 min read
Project Summary
A visionary general contractor with a knack for flipping houses embarked on what was to be his most challenging project yet: transforming a single lot into two brand-new duplex homes.
Facing skepticism from traditional lenders due to the complexity of this ground-up construction and his lack of direct experience in such projects, the investor found an ally in Simon Rishty.
Simon and the team at Express Capital Financing went above and beyond, employing a customized approach that leveraged the borrower's substantial flipping experience, ultimately securing financing that nearly reached 90% loan-to-cost. This success story shines a light on the importance of having a lender who not only understands the unique challenges of real estate investment but also champions the visions of their clients.
The Challenge
The borrower aimed to subdivide a lot into two properties, demolish the existing structure, and construct two new two-unit homes from the ground up—a venture that was substantially more ambitious than any of his previous deals.
This complex project encountered skepticism from many lenders due to its ambitious scope, the borrower's limited experience in ground-up construction as an investor, and a valuation mismatch where the site's value was initially appraised lower than the purchase price.
- Loan Qualification Barriers: Despite the borrower’s extensive experience as a general contractor and a flipper, they had never completed a ground-up construction project as an investor, which typically disqualifies them from certain loan programs.
- Misunderstood Investment Strategy: The project’s innovative approach was difficult for many lenders to comprehend, complicating the structuring of a loan before the purchase and subdivision of the land.
- Appraisal Shortfall: The initial valuation of the site was lower than the purchase price, further complicating the financial viability and loan approval process.
- Verification of Experience: The borrower’s extensive experience as a GC, crucial for the project’s success, did not meet traditional verification methods due to the lack of title ownership in previous projects.
The Solution
Simon approached the situation with a tailor-made strategy. Recognizing the borrower's existing expertise and potential for success, Simon engaged directly with the Department of Buildings and the project's architect to thoroughly understand and get comfortable with the investment strategy before the subdivision was executed. By collaborating with a local appraiser who had a deep understanding of the investment and the market, they were able to secure a site value that didn't limit the borrower's financing amount.
Moreover, the team at Express Capital Financing employed unconventional methods to verify the borrower's experience, considering previous ground-up projects he had completed as a general contractor, even though he wasn't on the title. This flexible and understanding approach enabled the project to qualify for financing under the Fix & Flip loan program, despite traditionally stringent requirements for ground-up construction loans.
- Flexible Financing: By recognizing hands-on construction experience, Express Capital Financing unlocked a Fix & Flip loan for the untraditional candidate, showcasing their innovative approach to lending.
- Tailored Strategy: Under Simon Rishty’s leadership, the team conducted in-depth discussions with city officials and the project architect to understand and advocate for the investment strategy.
- Appraisal Revision: A knowledgeable local appraiser was brought in to reassess the site value, reinforcing the financing deal in favor of the borrower.
- Experience Recognition: Stepping beyond the norm, the team evaluated the borrower’s previous construction experiences, emphasizing capability over direct title ownership.
- Achieving High Loan-to-Cost (LTC): The loan was successfully closed at nearly 90% LTC, reflecting confidence in the borrower’s proposal and the project’s viability.
Key Takeaways
This reconstruction project stands as a testament to the power of innovative financing solutions, expert guidance, and perseverance in the face of challenges. Through the dedicated support of Simon Rishty and Express Capital Financing, the investor successfully navigated the intricacies of his first ground-up construction project, underscoring the importance of selecting a lender that believes in its clients' visions and is willing to advocate passionately for their success.
- Don’t Settle for Typical: If a deal makes sense, exploring beyond standard guidelines can uncover viable pathways to success.
- Holistic Approaches Reward: Taking the whole project scope and all stakeholders into account, rather than just ticking the usual checkboxes, can secure superior outcomes.
- Expert Advocacy Matters: Working with an experienced lender and a committed loan officer like Simon Rishty, who can navigate through complex scenarios and advocate for optimal financing solutions, is crucial.
- Immediate Outcomes: The project closed at nearly 90% Loan-to-Cost, illustrating the success of the customized financing strategy.
From Visionary Concepts to Concrete Success: Make It Happen with Us
If you’re facing similar challenges with complex property developments or if traditional lenders have turned you away, we at Express Capital Financing are ready to lend support. Just like we did for this daring contractor, our team can provide tailored solutions that recognize your expertise and potential rather than just numbers on a page.Â
We go the extra mile to understand and support your project with innovative, flexible financing options that make sense.Â
Contact us today to discuss how we can help turn your real estate ambitions into your next big success.Â
Featured Topics
Overview
Loan Program Used
Fix & Flip
Closing Date
December 12th, 2024
Location
Queens, NY
Property Type
Single Family
Goals
Refinance and Fix & Flip to elevate property value significantly
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