A rundown and abandoned building outside of Philadelphia welcomes five residents after renovation—and produces immediate passive income for investor.

As a private lender in the fix-to-flip and fix-to-rent space, Rehab Financial Group (RFG) works regularly with local real estate investors, converting distressed properties into affordable housing units. In the workforce community of Frankford, located about 20 minutes north of Center City, Philadelphia, RFG helped a local investor convert a dilapidated eyesore of a commercial mixed-use building into five units of affordable housing plus renovated storage space.

RFG’s investor, Angelo, targeted an undervalued asset in the challenging Frankford section, a designated “opportunity zone” in Philadelphia where investors are incentivized through tax abatements from the city. The building was built in 1935 on a 1,540-square-foot lot. The building itself was approximately 2,592 square feet, structured as a multifamily with four bedrooms and four bathrooms. At the time of purchase, the building had been abandoned and was uninhabitable.

Angelo was able to acquire the building at a price of just $49 per square foot for $127,000. Using a 100% premier loan from RFG, the purchase price and renovation costs of $369,000 were fully financed for 12 months.

Angelo recently stated, “I feel like RFG has grown with me. When I was first learning the flipping business, they had me focus on single-family homes. After I had some successes, I brought a mixed-use property to them that had a commercial space on the first floor. They listened to my plans and approved my loan.”

Because this unique private loan does not require a down payment, Angelo was able to begin the renovations immediately using cash on hand. Renovations included taking the building down to the studs, running all new electrical and plumbing, and reconfiguring the space to accommodate five new affordable housing units. Each of the renovated apartments were configured as one-bedroom/one-bath units.

The renovation was intended to provide improved housing stock for the many individuals in Frankford on a fixed income as well as local veterans. Renovations took a year, after which all units were promptly rented for $1,300 a month.

The building was refinanced from the construction loan into a 30-year mortgage, with After Repair Value appraised at $570,000. Angelo realized a profitable gain on zero down due to RFG’s 100% program. He was able to refinance without issue, and the project yielded immediate passive income.