The Mill Woods Foreclosure Flip - How Speed and Private Capital Captures $43,000 in Equity
Let me give you a real-world example of exactly what I’ve been talking about. We just closed a deal right here in Edmonton that perfectly illustrates why smart investors and top-tier Realtors use private money to crush their competition.
If you still think a 12% interest rate is "too expensive," this is the chapter that will change your mind.
The Setup: The Clock is Ticking
An investor found a prime foreclosure property in Mill Woods—a solid, 2-bedroom townhouse. It was a classic "bread and butter" property. It needed some cosmetic upgrades, but it had incredible potential.
The Purchase Price was $197,000. The After Repair Value (ARV) was a highly conservative $240,000.
There was just one massive problem: The timeline. Foreclosures don't wait for anyone. If this investor went to a traditional Schedule I bank, they would be waiting weeks for an appraisal, stress tests, and committee approvals. By the time the bank finally said "yes," the property would be gone. The investor needed to close fast, do the improvements, and flip it back onto the market.
The Execution: Enter AJS
This is where we step in. When the file hit my desk, I didn’t ask for the borrower's high school transcripts. I looked at the dirt, the comps in Mill Woods, and the exit strategy. It was a clean, logical file.
Here is exactly how fast we moved:
Day 2: We approved the file and issued a solid Term Sheet.
Day 5: We fully funded the deal.
The borrower secured the property, beat out the competition, and immediately got to work.
The Deal Structure
We gave them exactly what they needed to maximize their leverage without locking them in.
Loan-to-Value (LTV): 80% of the Purchase Price.
Term: 6 Months.
Rate: 12% Interest-Only Payments.
Prepayment Penalty: Completely Open (Zero penalties to pay us off early).
The Math: Why "Expensive" Money is Highly Profitable
Let’s break down the exact numbers so you can see how this investor is using our capital to print money.
The Capital Stack:
Purchase Price: $197,000
AJS Hard Money Loan (80%): $157,600
Investor’s "Skin in the Game" (20% Down): $39,400
The Cost of Capital: At a 12% annual interest rate, the monthly interest-only payment on $157,600 is exactly $1,576.
Because our loan is completely open, the investor is incentivized to move quickly. Let's assume a realistic timeline: they take 1 month to paint and upgrade, and 3 months to list and close the retail sale. That’s a 4-month turnaround.
Total Interest Paid (4 Months): $6,304
The Payday:
Final Sale Price (ARV): $240,000
Gross Spread (Sale Price - Purchase Price): $43,000
Net Spread After AJS Interest: $36,696 (Available to cover rehab costs, realtor commissions, and the investor's net profit).
The Real Cost of Missing Out
Let’s look at this from the investor’s perspective. Their total cost to borrow nearly $160,000 of our money was just over $6,300.
By paying that $6,300, they gained access to a property that generated $43,000 in gross equity uplift.
If this investor (or their Realtor) had hyper-focused on finding a "cheap" 6% bank loan, the timeline would have expired. They would have saved $3,000 in interest, but they would have lost out on the entire deal. They would have made exactly $0.
The Bottom Line: You cannot deposit an interest rate into a bank account. You can only deposit profit. Hard money from AJS was simply the high-speed bridge that allowed this investor to cross over to a highly lucrative payday. Bring us clean deals with strong equity, and we will do the exact same for your clients.
