A growth-minded and relationship-based approach help convert a development project into a long-term cash-flow investment.
A real estate investor recently completed construction on 10 beautiful town homes in the suburbs of Fort Worth with the goal of holding and renting them. Short-term debt was originally used during construction and a significant amount of equity now existed. The investor was looking to refinance into long-term loans with a cash out component.
It quickly became clear that options were scarce. Lenders were limiting cash out advance rates, did not have a long-term product, or were using higher interest rates than desired.
After spending some time getting to know the client, their business, and the specific needs of the deal, Renovo developed a lending strategy. Because the borrower was a well-qualified professional investor who produced a high-quality product Renovo was able to offer a 75% cash out refinance allowing them to recoup almost all of the initial construction costs. In addition, each loan was a true 30-year note which created between $600 - $800 in cash flow per property that was used to qualify the project in lieu of traditional income qualifiers.
“Our company has built hundreds of new houses and town homes since 1999. Building and selling is a wonderful business model. However, Renovo Financial now affords us the option of building and holding the asset for cash flow and long-term appreciation. Something that we have been searching for for a number of years. I strongly recommend Renovo to any builder or investor that wants to increase their exit strategy options beyond the standard build and sell model.”
— DL | Dallas Fort Worth Developer
With flexibility and a growth-minded approach, Renovo was able to customize a solution that was simple and added value for the borrower.