Tampa Florida Fix and Flip Private Loan

[Edwin Epperson]

Investment Info:

Single-family residence private money loan investment.

Purchase price: $125,000
Cash invested: $25,000
Sale price: $440,000

Blue Bay Capital made this purchase and renovation loan to a seasoned and experienced investor in Tampa, FL. I provided 80% of the purchase price and 100% of the renovation. I also ended up providing a 2nd position JV agreement to help the investor complete the project without incurring additional delays or extensions. This is explained later. The property was sold in 2020 for $440K and was just RESOLD in 2022 for over $630K!!

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

This was a repeat and proven real estate investor that I have loaned to on multiple occasions. They have an excellent track record and are consistent and timely with their rehabs. This comes into play later. More so, this property is located in one of the most up and coming areas just North of downtown Tampa, called Tampa Heights.

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

The client approached us for the loan. Because we already had an existing relationship the underwriting process was extremely quick and easy. Due to the age of the property, we did require a foundation inspection, and we always require a line-item breakdown of the scope of work, and feasibility study. After making some adjustments we agreed on the budget and closed the loan within 15 business days!

How did you finance this deal?

I provided a 1st position loan to the client. Later on, we also provided a JV loan recorded in 2nd position to help cover unforeseen costs, as well the extension delays and city ordinance requirements due to the location and the "historical" setting the city wanted to keep.

How did you add value to the deal?

We added value by providing a 2nd position loan around the 12 month mark. The client was in a financial pinch, due to other projects going South, primarily due to a bad GC and bad architect on those other projects. His funding was stretched and I offered to provide the additional capital to upgrade the fixtures and finishings as well cover the cost of the extension of the 1st position loan and the holding costs of that 1st position for 6 more months.

What was the outcome?

The Client sold the project for approximately 40K more than we thought due to the market, and I was paid back my 1st position as well as the JV amount and a portion of the profits, but it was not a 50/50 split. The Client was able to keep their head above water, and walk away from this deal with a sizeable chunk of change in their pocket. I love working together with my real estate investing clients to structure win-win scenarios!

Lessons learned? Challenges?

Be sure to check your local permitting office for delays and specific areas of genitrification to see if the city has requirements such as sidewalk additions or aesthetic requirements due to a "historic" context they want to keep. If your area is prone to flooding, or Hurricanes please confirm with FEMA and the local zoning department to ensure there are no new requirements on renovations affected by updated FEMA maps.