Private Fix & Flip Loan in Florida

[Edwin Epperson]

Investment Info:

Single-family residence private money loan investment in Tampa.

Purchase price: $155,000
Cash invested: $30,000
Sale price: $319,000

This was a unique loan opportunity I had the opportunity to fund. The RE Investor is an experienced and highly qualified investor. They used us for the purchase of this property in 2017 with a completion time of 6 months. Due to extenuating circumstances, the project took a little over 2 yrs. We stepped in with a 2nd position loan to help complete the project and the investor did not default. A LOT of lessons were learned all the way around, but a successful project nonetheless.

What made you interested in investing in this type of deal?

This was a repeat client of mine. We had completed over 7 loans together in the span of two years. They had a solid construction team, systems and process set in place and documented. The Investor had plenty of cash in reserves and had a proven track record.

How did you find this deal and how did you negotiate it?

I first met the Investor from a FB post... or maybe it was in a local Meetup... I honestly don't remember. But we had lunch together, and I appreciated they dedication to details and processes. We did our first loan shortly thereafter in late 2016.

How did you finance this deal?

I originated and underwrote the loan, and had several partner investors who wanted to partner their capital with mine. I have a unique way of "fractionalizing the note" without actually fractionalizing. I made the loan, and then we closed on the deal. As is described in the summary the deal took a hard turn and the investor needed additional capital. I came in with a 2nd position (only because I controlled the 1st position, and we agreed to a profit split on this deal.

How did you add value to the deal?

Through my network of partner investors we were able to close quick (we were ready to close before title was even complete) and the Investor was open to hearing recommendations to would maximize profit. Communication is critical, and the Investor had open and transparent lines of communication with me throughout the whole process.

What was the outcome?

While the project took WAY longer than he or I had expected, he sold the property at a great profit, even with the holding costs, and the profit split due to the 2nd position.

Lessons learned? Challenges?

If your investing in an area that is prone to flooding or hurricanes then do your due diligence when it comes to FEMA. Having property well-vetted contractors and even an architect is paramount. Knowing your local municipality rules concerning flood zones and more importantly what is planned for the future is key, especially if the project goes long. There are many learned don this project and if you want a deep dive I'm happy to have a conversation about what went wrong and lesson's learned.