Jacksonville FL Private Loan - Rehab Investor

[Edwin Epperson]

Investment Info:

Single-family residence private money loan investment.

Purchase price: $50,000
Cash invested: $48,000
Sale price: $125,000

This project was one of the early loans I made in my career. The real estate investor was an experienced Jacksonville rehabbed, and they had a program set up to pre-qualify downpayment assistance buyers to be able to buy their houses. This loan was a short 6-month loan, with an easy turnaround. This was an interest-only, purchase loan. Because they handled all the renovation, which was $43,000 we only required 10% down on the purchase.

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

The borrower is an experienced real estate investor with over 100+ properties completed over a 20+ yr career. They understood and respected my need to be in a protected position, and they provided 100% of the renovation costs as well 10% of the downpayment on the purchase. They had a well-oiled team they had been working with for many years and were able to get in and complete the project in record time.

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

I met the borrower from a FB group back in late 2014 or early 2015. I appreciated their approach to making affordable houses available to an underserved community in downtown Jacksonville Florida. They assured me they would handle 100% of the renovation and 10% of the Downpayment as long as we could close really fast. We accomplished a 3-day turnaround on the appraisal and were able to close within 7 Business days.

How did you finance this deal?

I financed this loan through my proprietary "Turn-Key" Private Lending solution. This allowed me to partner with several capital providers and me into an irrevocable trust that my company was the trustee for and I made the loan through the trust. My capital partners were secured in 1st position, through the Trust and we all earned monthly interest for the duration of the loan. I explain more about my "Turn-Key" Private Lending solution on my website, www.bbcfunding.com/turn-key-solution

How did you add value to the deal?

By not requiring a ridiculously high number of documents we were able to process, underwrite and close within 7 business days. HOWEVER, this was because this client was a REPEAT client, and I value repeat business. I will always bend over backward to help structure a deal for the benefit of all parties, including my real estate investor.

What was the outcome?

The Project was completed and renovated within 45 days, and listed on the market. Unfortunately, because the investor focused on families needing downpayment assistance, the first buyer fell through after spending 60 days in underwriting, and it was the 2nd buyer that we need up closing on 60 days later. There was NO delay in getting it under contract as the investor was diligent about lining up potential buyers for the numerous properties they flipped in the Jacksonville area.

Lessons learned? Challenges?

Never assume that an accepted sale contract is all you need. Continue to market and work to identify additional buyers. Even if the 1st buyer goes through you now have a potential buyers list that you can quickly send notifications to about upcoming projects.