The sponsor recently acquired this property to perform an extensive remodel that would more than double its existing size and go up one-story to capture bay, city and ocean views. It’s a fix & flip on steroids in one of San Diego’s older, most coveted coastal neighborhoods.
Challenges arose early when their prior lender failed to perform at closing, thereby necessitating an all-cash purchase. This had the potential to create an impact on the project financials and IRR. Additionally, they were anxious to start the demo work and prep for the remodel, but with the improvement plans not yet approved, the permit was not available. Also, having lost their lender, they didn’t have construction financing in place. Initiating the demo and prep work early would break priority and create challenges with title insurance…so they were faced with losing time, momentum and far higher opportunity costs with this free and clear fix & flip.
Having made many loans in Pt. Loma, SFG understood the submarket. We also understood the challenges, so we crafted a solution that quickly addressed the issues. SFG recorded the loan in just days and before priority was broken, we released cash to the sponsor for recovery of the much larger, unintended capital investment and we set aside the full estimated costs of the remodel and expansion pending project approval and permit issuance. The sponsors recovered capital, broke ground and quickly reestablished momentum.
Our thanks to Sal DeMaria with Berkshire Hathaway Home Services of Pt. Loma Village. A valued and respected contact for market conditions in this desirable beach community, Sal arranged immediate access and provided numerous current sales comps for both the lot value and the as-completed value based upon recent sales prices per square foot. Sal, and the balance of SFG’s wide network of real-estate professionals, add great strength to the value analysis component of our due diligence process. When coupled with more than 25 years of experience as one of the West’s leading private money funds, they allow SFG to fashion unique solutions, quickly underwrite value…and close your loans NOW.
