Client Success Story: Charlestown, MA
November 22, 2019
Location: Charlestown, MA
Type: Refinance and renovate – condo conversion of a 3-unit
We were excited to take a look at this loan request because of the proximity to downtown Boston and to lend to a borrower of this caliber. He is a seasoned investor doing several projects a year in the Boston area. The deal came to us in early October needing to close no later than 10/15/19.
The borrower had used another private (hard money) lender to purchase this building in 2018 with a 12-month loan. Unfortunately, a variance was needed from the City to build off the back of the building. The variance process alone took 12 months and the loan expired. As a result, the borrower came to us looking for a refinance to payoff the 1st loan and fund the remaining $460,000 of renovations. To-date, approximately $160,000 has been spent on demo and the addition.
The borrower’s plan is to finish the renovations and convert to condos, a common ‘play’ in the Boston market with investors. His projected resale total is $2.5m on the 3 condos. EMCAP reviewed the sold comps in the map below, which shows plenty of sales. While our value assumption is slightly lower than the borrower’s, the ARV (After-Repaired-Value) ratio is still under our 70% threshold. Beyond meeting our ARV marker, the borrower’s cash investment in the deal puts the LTC (Loan-to-Cost) at 83%, just under our 85% target.
In conclusion, the deal was approved because of location, valuation, and strength/experience of the borrower. We met his 10/15/19 deadline to close.