$629K fix & flip in Newark, NJ — 85% LTC, 14-day close

Situation

A builder-investor bought a vacant three-family building that needed a full gut renovation — new systems, layouts and finishes in every unit — in a neighbourhood where renovated multi-family buildings sell to owner-investors.

Structure

Three units sit inside the 1–4 unit standard program. The loan funded 85% of the $740,000 total cost on an 18-month interest-only term at 9.00% with two points, below the 75% cap on the $1.05M after-repair value. It closed in 14 days.

In numbers: a $629,000 loan against $740,000 of total cost left $111,000 of borrower equity in the deal. The value test — 75% of the $1,050,000 after-repair value ($787,500) — sat above the loan, so cost, not value, set the size. Fully drawn, interest-only carry at 9.00% works out to about $4,718 a month, and 2 points of origination came to $12,580 at closing.

Draws

The draw schedule ran by building system and unit: demolition, structural and roof, mechanicals across all three units, then finishes unit by unit so completed apartments could be shown early.

The file

What was in the file: the purchase contract, a scope of work broken out by unit and by building system, the GC agreement with license and insurance, permit applications for the mechanical work, and the investor’s record of completed renovations. The appraisal valued the building as renovated against recent sales of comparable three-family buildings. Six months of reserves sat in the operating account through the project. Because a vacant building carries more risk than an occupied one, builder’s risk insurance was bound before closing and the first draw was scheduled for demolition and structural work.

Exit

The finished building was sold to an investor buyer, retiring the loan inside the original term.

• Unit-by-unit finish draws
• Licensed GC with multifamily experience
• Realistic 18-month term
• Exit buyer pool identified upfront

Fix & flip program terms →

Fix & flip loans in New Jersey →