Renovations Needed on Mixed Use Retail Portfolio
Need to buy and renovate an investment property? We can help.
“We were able to structure a deal for our borrower that allowed him acquire the property with limited down payment while providing immediate renovation funds to give the property a proper upgrade. The value-added component we negotiated included “good news" money, or earnout funds. This rewards increased property value as a result of his property renovation and stabilization efforts. Our borrower was also given 12 months of interest-only payments to renovate and stabilize the property.”
-Chris Miller
Deal Quick Look:
$2,550,000 financing secured
10-year loan term
12 months of interest-only payments; followed by a 25-year amortization
Prepayment penalty for the first five years
Renovation Funds
Earnout money once the property was complete and stabilized
36,710 SF Rentable Space
The Property: This is a multi-tenant strip retail center with 36,710 SF rentable space and ten apartment units located on the second floor of the center. The property is unique as it offers two sources of income. The apartments historically have been 100% occupied, but the retail portion of the center was 30% vacant at the time of closing. Our borrower came to the table with a strategic plan to improve the property, which included property upgrades and expanded leasing activities to ensure the remaining vacancies were filled.
The Challenge: The borrower was looking to acquire acquisition financing as well as renovation funds to complete a new roof, façade, signage and parking lot upgrades. The borrower was familiar with the local market and was working during due diligence to secure new leases prior to closing.
The Solution: Chris Miller secured an acquisition/renovation/permanent loan in the amount of $2,550,000 to acquire and renovate the mixed-use retail plaza. He was able to place the borrower with a lender who would offer 75% LTV at closing to acquire the property and renovation monies based on the “as-complete” value of the property. The lender would also provide “earnout funds” subsequent to renovation, completion and stabilization when the borrower had completed his business plan.
