A past client of ours who is involved in fix and flips had called us with a project that he had been working on. It was a duplex that was in poor condition whereby he had obtained a bridge loan and renovated the units and at the same time he applied for permits for an ADU dwelling. His initial plan was to sell the project at a premium with the approved ADU permit, but it turned out that California's new 2024 ADU dwelling unit laws were changing in his favor. He would be allowed to separate the parcels from the duplex and the ADU which now meant if he completed the ADU his potential premium was far greater, thus is why he approached us to take out his current bridge loan.
Our biggest challenge was he wanted the lender to use a recent appraisal that he obtained on the property. The lender agreed but as it turned out in the appraisal review process, the appraisal management group wasn't in favor of how the appraisal was completed and internally they had derived to a lower opinion of value which affected our expected loan amount.
We were able to get the lender to agree to increase their allowable LTV we closed the deal in record time right before the holidays. Our new bridge loan allowed the borrower to get cashout, more than enough to complete the ADU and this will then allow him to accomplish his goals. Was an interesting project to work on.