San Diego Commercial Hard Money Loan Helps Investor Add 10 Units in North Park
A Case Study in Value-Add Success
In San Diego’s competitive real estate market, timing and flexibility can make or break an investment. That’s why one North Park investor turned to a commercial hard money loan from Lantzman Lending to bring their multifamily vision to life. With a $2.6 million renovation loan, they were able to add 10 brand-new units to an existing property, fully lease them out, and ultimately refinance with a traditional bank to secure long-term financing. The project started with a simple goal of expanding an existing multifamily property by 10 units from 4 units to 14 units. Traditional banks tend to shy away from heavy renovation projects, especially when value creation depends on future construction and lease-up. That’s where a commercial hard money loans can help to fill the gap in financing options.
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Loan amount: $2.6 million with a $2 million renovation budget for the addition – we financed 100% of the construction
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Location: North Park Neighborhood of San Diego, CA
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Timeline: Almost 2 years from loan origination to full payoff through a bank refinance – we offer extensions on performing loans beyond original terms while many of our competitors are less flexible
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Result: A stabilized property with stronger cash flow and a major boost in long-term value of the property. While the cost was approximately $2M, the value creation was in excess of $3M. This is a very raw analysis as there were some other costs associated with the buildout in addition to hard costs, but from a gross increase in value the numbers look very good!
By the time the project wrapped, the investor had fully leased all 10 units. With stable rents and higher property value, a conventional bank was willing to refinance the loan, paying off our short-term bridge financing and locking in more favorable long-term debt. Vacancy rates in San Diego remain very low at 4% and this makes for a quicker stabilization and refinance. In the remainder of post below, we will discuss some features of our loans and also a brief overview of the San Diego multi-family market.
What Makes Lantzman Lending Renovation Loans Unique:
Our renovation loans stand out for features designed to keep investor costs low and their projects moving quickly. Here is what you can expect from a Lantzman Lending fund control loan for your renovation or addition:
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Interest-only payments on funds drawn — no charges on unused capital, you only pay on funds used to date. We also offer quick draws on completed items with a efficient draw system
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Minimal fund control fees — limited or no setup/draw costs for most renovation loans. In some cases Lantzman Lending will bring in a 3rd party for fund control but in most instances this is handled in house by our professional staff.
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Owner-builder friendly — borrowers can act as their own general contractor, which many lenders don’t allow. For remodel and additions, we wire funds to the owner who can then pay their contractors, subs, or laborers.
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Flexible draw process — tailored for project size, with tighter controls only on large loans. We work with our borrowers to create a draw schedule that works for all parties.
This structure allows our client to focus resources on construction and lease-up, while creating a fund control process with the least amount of friction.
San Diego Multifamily Market Snapshot
Greater San Diego continue to be a hotbed for multifamily investment, particularly with home affordability waning due to increasing prices and higher interest rates. However, at the same time inflation and building costs have increased significantly over recent years making cost control an important factor towards building multi family projects in San Diego County. As you can see from the most recent report from below, the San Diego market has had stable rents & cap rates, but sales price per unit has decreased significantly over the past year.
Here’s where the market stands as of late 2025:
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Sales Prices: Multifamily assets trade at roughly $390K–$401K per unit according to multiple reports. The average size of a multi family unit is about 760 SF. This equates to a sales price per SF of about $526 per SF. Build costs have been on the rise, and sources are showing costs to build right around these sales price in 2025. This means that multi family investors that plan to build from the ground up need to control costs and plan for a long term strategy that allows the investor to take advantage of the tax benefits in addition to getting appreciation in rents and values over time.
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Rents: Asking rents average $2,741–$3,100 per month, depending on unit size and source. While smaller units (studios and one-bedrooms) saw rents soften by ~6% this year, occupancy remains strong at 96%.
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Vacancy: Occupancy sits near 96% which is essential maximum occupancy
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Affordability Trends: Rent-to-income ratios are easing, dipping from ~35% to ~31%, but San Diego remains one of the most expensive rental markets in the U.S.
From the two graphs we can see that rents and vacancies have remained stable and cap rates are essentially flat, yet sales prices per unit have dropped by 22% in the 2nd quarter. However, prices seemed to bounce back in July to around $335k per unit. The most likely explanation is that NOI is being squeezed by rising operating expenses such as insurance, property taxes, maintenance, payroll, and utilities, or that smaller units are trading, which pulls down the average price per unit. But as you can see from the 2nd graph below, there tends to be significant fluctuation in the cost per unit price, but the long term trend seems to be fairly stable. Often times local or regional data can experience monthly fluctuation due to smaller data sets, and you need to look at long term trends to make a determination.
Overall, the San Diego multifamily market is stable from an occupancy and rent perspective but potentially faces pressure on valuations due to higher expenses. Short-term fluctuations in per-unit pricing highlight the importance of focusing on long-term trends: steady demand, limited supply, and strong fundamentals continue to make San Diego an attractive—though cost-sensitive—market for investors.
The Takeaway for Investors
This project is proof that hard money loans aren’t just a last resort—they’re a strategic tool for experienced and newbie investors alike. With Lantzman Lending, you’re not just getting capital, you’re gaining a partner that understands the nuances of value-add real estate. Whether you’re planning a heavy renovation, adding new units, or need fast funding to close a deal, we provide flexible financing solutions that banks simply won’t touch. Stabilize your cash flow, increase your property’s value, and refinance into long-term debt when the time is right.
Turn your vision into value—get a quote from Lantzman Lending today and let’s build your next success story.
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