Recent Deals
» Avatar Creatively Funds a North San Diego Apartment Building
Property Description:
$3,500,000 on a 22-unit apartment building in coastal CA outside of San Diego. Avatar's loan was creative by having the interest reserve built in with monthly payments @ 8% with a 1-year balloon.
One of the most difficult tasks in the construction industry is predicting the ‘snags’ that might increase the budget or prolong development. A few such snags put this 22-unit apartment building construction project over budget and behind schedule. The construction loan, as well as personal funds contributed by developer, was depleted.
With the project approximately 95% complete, contractors had stopped work. Although he had substantial equity in the project, the developer was unable to obtain bank funding and was about to lose the entire project for lack of the last leg of operating capital. An alternative funding source, able to provide creative financing, was needed to see the project through to completion.
Avatar Financial Group developed a funding package of $3.5 million dollars. Avatar paid off the construction lender and, by paying contractors, cleared the contractor liens from the property as well. The balance of $200,000 provided the operating capital needed to complete the project.
By building an interest reserve into the loan, Avatar’s package provided affordable monthly payments with an accrual of the additional interest due along with a one-year balloon payment. This enabled the developer to achieve a monthly positive cash flow during the initial rental phase.
The project is healthy again and provides much needed housing to its community.
