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CASE STUDY: $165K Fix & Flip Loan: Philadelphia, PA

Philadelphia, PA

Hey everyone! Our iFC CASE STUDIES give you real-life details about how other investors used our loan products to build their portfolios!

Highlights 

Location: Philadelphia, PA 

Loan Amount: $165,000 

iFC Loan Product: Fix and Flip 

Property Type: Single Family Residential 

Loan Closing Date: 02/08/22 

 

Purchase Price: $175,000 

Construction Budget: $70,000 

 ARV: (On Construction Loan) 36% 

Loan to Cost: 60% 

Length of Loan: 12 Months 

 

Overview 

This new client is a full-time real estate agent/broker who also passively invests in real estate. He has eight flips under his belt, and he owns ten rental properties in the higher-end luxury home market in Philadelphia. 

The borrower typically uses cash to fund acquisitions and construction costs, however he was running into cash flow issues due to high construction costs. Although the borrower liked the flexibility of using his own cash to avoid managing draw requests, he no longer had the ability to fund 100% of construction over his three active properties without depleting his cash reserves. 

This successful investor found himself stuck—needing to choose between selling one of his three projects at 50% completion or finding another option. To make matters worse, the borrower had subcontractors breathing down his neck and he did not have the luxury of time to wait for a bank, nor would they be able to offer him the leverage he needed.  

 A mutual contact in the real estate community referred the borrower to iFC’s co-founder Chris Tereo. After hearing the investor’s dilemma, Chris walked the investor through a creative financing technique called “delayed financing.” Essentially, this meant that, by leveraging the original purchase price of the house, iFC could give the investor a “cash out” loan to help him recoup some of the construction costs he had already spent. Then, in addition, iFC would fund 100% of the construction costs in holdback. 

Key Loan Benefit to Borrower:  

The ability of iFC to be flexible in this situation not only gave the investor enough capital to finish the three projects he was involved in but, since he had purchased the majority of his assets in 100% cash, the extra liquidity provided him enough capital to purchase a fourth project!  

 The investor saw the value of using debt in a smart way, so much so that he decided to scale his business by using his cash for the 15% of equity needed in deals, and IFC for the remaining 85% in debt. 

Customer Feedback:  

Not only did my projects get saved, I also increased my cash-on-cash return by leveraging my capital! 

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