Fix & Flip Capital Mechanical Overhaul & Value-Add Unit Modernization

The Investor Scenario & Opportunity

A regional real estate development firm contracted a 12-unit garden-style multi-family asset in New Freedom, Pennsylvania. Positioned in Southern York County directly along the Interstate 83 commuter corridor near the Maryland border, New Freedom serves as an attractive residential sub-market for commuters working in Northern Maryland, York, and Harrisburg.

The seller was an institutional real estate fund offloading non-core secondary market inventory. The fund required an immediate, non-contingent five business day closing to meet end-of-quarter portfolio rebalancing targets. The sponsor negotiated an off-market purchase price of $1,200,000. Fully repositioned multi-family properties with updated mechanical systems in this sub-market were trading at cap rates supporting valuations near $2,300,000.

The Strategy & Capital Requirement

The primary objective was funding speed combined with portfolio liquidity preservation. The institutional seller established a strict five business day closing window, with non-performance resulting in contract cancellation and forfeiture of rights to the deal.

At the same time, the development firm was managing two active commercial build-outs in York and Harrisburg. Preserving working capital was critical to maintain subcontractor payments and material orders on active sites. The sponsor required a direct financing partner capable of delivering capital in five business days while funding 90% of the purchase price and 100% of the construction scope.

The Henry Solution (Loan Mechanics & Underwriting)

Hard Money Henry underwrote the loan using direct balance-sheet metrics and local sub-market commercial sales comparables. Our underwriting team completed an in-house asset evaluation within 24 hours, bypassing the lengthy delays of third-party commercial appraisals.

We issued a firm commitment letter and structured a $1,504,000 total loan facility, financing 90% of the purchase price ($1,080,000) and 100% of the renovation construction budget ($424,000). Construction capital was escrowed and released across four milestone draw inspections as work was completed. The transaction funded and closed in five business days.

The Financial Win & Outcome

The sponsor executed a five-month repositioning program. The core value-add strategy focused on major mechanical upgrades and interior unit modernizations. The investor allocated $180,000 of the $424,000 budget to install individual high-efficiency HVAC units, sub-meter electric and water services, and replace deteriorated architectural shingle roofs. The remaining $244,000 funded interior updates across all 12 units, including modern kitchens, quartz countertops, updated bath fixtures, and vinyl plank flooring.

The capital updates reduced operating expenses, allowing the sponsor to achieve target market rents and sell the fully renovated, stabilized complex to a private equity buy-and-hold group.

• Purchase Price: $1,200,000
• Rehab Budget: $424,000 (HVAC replacement, utility sub-metering, roof replacement, interior unit upgrades)
• Financing & Holding Costs: $85,000
• Selling Costs (6%): $138,000
• Total Cost Basis & Expenses: $1,847,000
• Final Sale Price: $2,300,000
• Net Profit: $453,000

Key Takeaways for Local Investors

• Mechanical overhauls and utility sub-metering increase net operating income. Separating utility expenses lowers ongoing landlord operating costs, significantly raising commercial property valuations.
• Speed secures institutional fund offloads. Partnering with a lender who guarantees capital delivery in five business days enables sponsors to buy discounted institutional portfolio assets.
• 100% renovation debt preserves corporate liquidity. Structuring loans to fund total construction draws keeps sponsor cash flow available for concurrent active developments.

Seeking direct hard money capital for a multi-family acquisition or value-add renovation in Pennsylvania? Submit your property address at hardmoneyhenry.com/apply for a 24-hour commitment letter.