Glendale Fix and Flip Loan

Amount
$950,000

Location
Los Angeles, California

Rate
10.0%

LTV
70.0%

Term
18 months

Type
Fix and Flip

Residential
Multi-Family Home

Exit Strategy
Refinance with a Bank

Crescent Lenders recently funded a $950,000 hard money loan for a distressed, non-performing 5-unit multi-family apartment complex in Glendale, Los Angeles County.

The borrower owned the property free and clear and required a hard money loan to renovate all five units, with the intention of stabilizing the property by turning it into an income producing asset. 

An experienced construction manager was hired to oversee and facilitate the project, which is anticipated to take roughly six months to complete. This gives Crescent Lenders confidence in the project not going over budget and staying on a schedule through the renovation process.

The renovation plan includes upgrading plumbing and electrical systems, installing new kitchens and bathrooms, and painting the exterior of the property. The borrower’s goal is to attract high-quality tenants to maximize market rents and therefore increasing the value of the property as a whole.

The third-party, independent appraisal company we use, valued the property at $1.5 million, leaving us with conservative loan-to-value of 63.3% LTV, which is sufficient protection for us in the event of a downturn in real estate prices.

Additionally, our underwriting team analyzed local comparable sales to ensure the projected after-repair value was in line with what the market dictates. This independent due diligence process is a key reason Crescent Lenders’ has been so successful in the California private money lending industry.

How the Deal Took Place

The borrower called in and after a few questions over a short 5 to 10 minute phone call with one of our experienced team members, the deal was passed to our lead underwriter who spoke with the borrower on the phone the same day.

The borrower had been approved by a different hard money lender already, but due to a disagreement on origination point structure, she decided to use our services instead. She appreciated our transparent communication and straightforward terms while also enjoying the ability to speak directly with decision-maker, rather than having to go through multiple channels.

Two days after the initial phone call with the borrower, our chief underwriter was able to do a site visit to view the property and also meet with the borrower in person, helping to establish a mutually beneficial relationship.

The borrower was missing fire insurance which caused a slight delay in the funding, but nonetheless, the borrower had the funds in 8 days from the initial point of contact.

About Glendale, Los Angeles County

Glendale is located in the heart of Los Angeles County, and is a very desirable rental market for investors, known for its strong rental demand, safe and walkable neighborhoods, and close proximity to major job commerce areas like Burbank, Pasadena, and downtown Los Angeles.

Rental rates continue to rise as there is limited new multifamily supply, therefore, value-add renovation projects like this one make economic sense for investors to increase equity and to create stable long-term income.

As private lenders, this type of project offered a limited risk profile and a desirable location, with a borrower who has equity and a clear exit strategy.