“Nectar helped us secure over $1 million in working capital. This enabled us to grow proactively instead of waiting until we saved up enough cash. I was so impressed with the Nectar team’s speed and flexibility, and I highly recommend them to any real estate investor looking to grow!”
- Harrison Y, Short Term Rental Owner-Operator
Deal Type: Owner-Operator
Portfolio size: 124 units
Use Case: Get approved for a bank line of credit
Location: Texas Gulf Coast - Galveston MSA
Advance Amount: $1,000,000
Deal Structure: 2 month ramp up period followed by 14 month term
Harrison Y is co-founder of a vacation rental company primarily focused on beachfront units on the Texas Gulf Coast (Galveston). The business is in a period of high growth, adding 73 units in the past 18 months.
The company has set itself apart as one of the top short-term rental operators in the U.S. and is a member of the STR Legends Mastermind. In just five years, it has grown remarkably quickly while also building a strong track record of successful investments and satisfied guests. The business has a 4.9 star rating overall with 650 reviews.
Even the most successful short-term rental operators will often struggle to secure capital from institutional lenders, due to the unique cash flow characteristics and business model of this type of real estate business.
This creates an opportunity for Nectar to work in tandem with traditional funding sources, providing the advance entrepreneurs need to secure a line of credit or make a down payment on an additional property.
In this instance, the entrepreneur needed an extra $1 million on their balance sheet in order to secure favorable terms on capital from a bank.
Due to current economic conditions, we took a fairly conservative approach to underwriting. We ensured the initial coverage ratio met our requirements using only NOI from stabilized properties already in operation. When adding in conservative projections on new properties, the coverage ratio more than doubled.
We also structured the deal to have a shorter term length, which will provide attractive risk adjusted returns.