Background
A Gloucestershire based developer saw an amazing opportunity to acquire a two bedroom Semi-Detached Bungalow through a probate sale, at well below true market value. To maximise his returns, he needed to arrange short-term finance quickly and at a competitive rate to support both the purchase and refurbishment. The property had a realistic market value of between £125,000 and £150,000, and the asking price was £105,000.
To meet the tight deadlines, the borrower needed a lender that could move fast. He knew he needed to use bridging because the transaction is off market and required a significant refurbishment. It was mortgageable as it stood, but as he was buying Below Market Value the developer could net more day one by using an Apex Bridge as we lend against value as opposed to purchase price. The additional benefit of using us is the developer had to put very little of his own money down to complete the purchase.
The property was in a very poor state and needed a full refurbishment throughout to include a new kitchen, bathroom reconfiguration, new windows, internal doors, plastering, re-decoration, and rendering of the exterior. The cost for the works was £25K, with an anticipated timescale of 6 weeks. The developer is looking at an end value of £190-£200K.
The developer intended to do as much of the work as possible himself, his sons are tradesmen and would also help, along with other tradesmen with whom he has worked previously. The borrower lives three hours away from the security and would be staying at a local B&B for the duration of the works.
On completion he intended to market the property with local agents. His back-up plan would be BTL refinance, and he potentially even has a tenant lined up if needed. Luckily this is the sister of the gentleman who lives next door to the security.
The Apex Solution
Time was of the essence and he arranged a gross loan of £106,250 through Apex. As the developer had to put very little down to be able to complete the purchase, he was able to find the refurbishment costs from his own financial resources. This would have been very difficult or impossible if he could only acquire a loan based on purchase price or through a lender requiring a larger deposit.
With a final selling price of £190 -£200,000, and refurbishment kept within the £25,000 budget, the project could achieve a gross profit in the region of £65,000.