Whether by virtue of a lack of capital, or perhaps an absence of available time and the requisite skill sets, this project had sat largely dormant and untouched since early in the recent downdraft. It was an asset sorely in need of repositioning, and the experienced buyer/sponsor saw this 25 (of 40) unit condominium project as an opportunity. Most importantly, they possessed the capital and experience necessary to tackle a project of this nature and to profit through the process of applying their time, skills and resources.
During the downdraft, Seattle Funding Group of California provided bridge loans (acquisition) and construction loans (completion financing) for numerous residential projects that had fallen into the turbulence. The banks simply wouldn’t touch these projects, leaving them instead for experienced hard money lenders. The core underwriting challenges are always the same – is the current market ready to accept the completed project at the recast numbers, and does the sponsor possess the ability to execute the plan and create a successful development from its current, much-challenged condition? Then, within a very few days, answer those questions, and more (Title, BRE, Permit status, Conventional Financing Approval, HOA Status, Completion Budget, etc…) knowing there is simply no room for error.
In the instant case, the probability of market acceptance of the completed product and recast price point was aided by the fact that the project’s submarket had seen the effects of the nascent recovery. In addition, SFG of CA’s underwriter had seen the project several times during the downdraft, we had enjoyed prior, successful lending transactions with the new buyer/sponsor, and we have many, long-term relationships with experienced, Coachella Valley real estate professionals to quickly ascertain values. Even then, given the shortness of time and complexity of issues often associated with such projects, push quickly came to shove on meeting the contracted closing date, and SFG had to carefully quantify and evaluate the remaining risks and exposure in order to safely close this bridge loan. This is the point at which SFG’s senior management truly excels, with decades of hands-on experience, and a new, advanced textbook written on the topic during the downdraft.
End result: Another closed bridge loan and construction loan to reposition an asset that was ready for a capital infusion and an experienced team at the helm. These projects and their myriad underwriting demands can be a bit of a challenge up-front, but in the end, they have proven to be financially successful for SFG’s clients. And when Seattle Funding Group clients win, WE ALL WIN.
Bridge loans, construction loans, fix and flips, and sometimes all three at once!
