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Case Study: From Worst Deal of 2023 to Best Deal of 2024??

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  Here is a case study on how we turned our worse deal into potentially our best deal!   We funded a large fix and flip loan on a property in Siesta Key, FL. We provided a $1.9 million initial advance and construction holdback of $150,000.   The purchase price was $2.5M and the After Repaired Value was just about $3M.   The borrower was a group out of Miami.   They were supposedly experienced borrowers, but they were new borrowers to us.   They weren’t the best borrowers to say the least.   About 3 months into the loan, they stopped making payments.   Most borrowers that go into default find a way to get the project back on track.   We just knew that this group wasn’t going to fix the situation.   We didn’t wait to file a foreclosure.   We went after them hard and tried to pursue our pledge of equity.   In the event of a default, the pledge of equity allows us to go after the shares of the entity that owns the property.   It gives you more leverage than a typical foreclosure because yo
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Case Study- Six Townhouses in Miami New Construction

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We recently funded a new construction project for six luxury condos in Miami Beach, FL.  The total financing was $2.26M.  Here is how this deal went from start to finish. Origination- This deal was brought to us by a broker that we know very well. We've done several deals with this broker.  When it comes to new construction deals, especially ones with multiple units, experience and knowing who you're dealing with is key to a successful transaction.   One of the first things we do when a new construction deal is presented to us is request the borrower's experience file.   We obviously check to make sure the asset class and location is a fit and the loan amount is within our limits.   But we make sure the broker or borrower sends the experience file. If they don't have recent (within 36 months) and relative experience, it's a hard NO and we move on.  By relevant experience, we need either new construction of similar asset classes or VERY heavy rehab deals (at least 5)
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About the Author- John Femenia

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John Femenia is a seasoned finance professional with over 15 years of experience in investment banking and real estate. His career began in the maritime industry, where he worked as an engineering officer for Military Sealift Command, a civilian transportation company serving the US Military. He later joined SEACOR Holding, an oil and gas services company, as an associate working directly with the CEO. During his time at SEACOR, John evaluated acquisition targets and explored various business development opportunities. Transitioning to investment banking, John worked for several prominent bulge bracket banks. His focus was on raising capital for industries such as rail, trucking, and maritime, successfully securing over $2 billion in equity and debt capital. In 2019, John founded Source Realty Capital with the aim of assisting real estate investors in obtaining the necessary capital to close their deals. Recognizing the void left by traditional banks after the Great Recession, John s
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How to Use Hard Money Loans to Invest in Real Estate?

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Hard money loans have become a popular financing option for real estate investors looking to fund their projects quickly and efficiently. Unlike traditional bank loans, hard money loans are typically provided by private lenders or investor groups and are secured by the property itself. This article aims to provide a comprehensive guide on how to effectively use hard money loans to invest in real estate. 1. Identify the Right Opportunity: Before seeking a hard money loan, it is crucial to identify a viable real estate investment opportunity. Conduct thorough market research, analyze property values, and assess potential returns. Look for properties that have the potential for appreciation or can generate positive cash flow. 2. Find a Reputable Hard Money Lender: Research and identify reputable hard money lenders who specialize in real estate investments. Look for lenders with a track record of successful deals, transparent terms, and competitive interest rates. Seek recommendations from
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Case Study- $4.3 Million Fix and Flip Loan

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We recently closed a $4.3 million fix and flip loan for a property in Sands Point, NY.   This was one of our larger loans for single family residences (SFR).   Typically, our fix and flip loans for SFRs are capped at $2 million, although lending in high price cities has lead us to increase our loan limit for SFRs recently. What made this deal different?  There were a few things.  First off, this was a unique property.  This property was situated on 7.5 acres in prime Gold Coast waterfront property.  For those of you who don't know, the Gold Coast of Long Island the North Shore of Nassau County.  This area was made famous in F. Scott Fitzgerald's  The Great Gatsby.   The combination of the area's beauty and it's close proximity to NYC makes it a very attractive place to live.  The median income in the area ranks amongst the highest in the nation.   We were quickly able to get comfortable with value given the properties size of 7.5 acres. Our borrower purchased this prope
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New Investor- Fix and Flip Loan in Brooklyn, NY

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We recently funded a fix and flip deal from a "new investor."  In the fix and flip lending world, a new investor is someone that has not completed (bought or sold) a deal in the last 36 months.  Now this definition can be a bit frustrating at times for borrowers.   We constantly get calls from borrowers that say, "I've flipped 30 homes, but nothing in the past few years because of the pandemic," or we get someone that says "I've built 20 ground up homes in the past for clients, but I wasn’t on title for any of them."  And then we have to gently explain to the borrower that they're considered a "new investor" because they don’t have any recent deals in their name, and we have to lower our loan amounts.  It's a hard conversion to have, because most of the time, we know that this borrower is very capable, but we just can't get them the best rates or leverage because they just don't meet the "experience investor" def
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Case Study- Ten Property Portfolio Deal with John Femenia

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  John Femenia , found of Source Realty Capital , recently closed a 10-property portfolio deal in Hollywood, Florida for one of John’s repeat borrowers.  The borrower came to SRC after another lender wasn’t able to close the deal. This left us a limited amount of time to get the deal done, as the borrower had over $500,000 deposit on down on the property that had already gone hard. Deal Overview The borrower was purchasing a 10-property deal consisting of nine properties that ranged from 2-4 families, and one 6-family property.   The total unit count of the deal was 36 units.    The deal was split up on two different contracts.   Each contract was for $2.6 million, for a total of $5.2 million.   The  borrower put down 10% on each contract, for a total of $520,000.   The properties were 100% leased.   The cap rate for this deal was 6.5%.   Timing The borrower came to John Femenia in mid-December looking to close this deal. The borrower had a TOE for January 16, 2023.   Not on
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