S. Clay Sparkman
Every now and then I like to present one of the loans that we have placed or are in the process of placing, so that blog readers can see (a) the types of loans that we are placing, and (b) how we feel that loans should be presented. Keep in mind that this is only the summary. We put this on top of all of the relevant documentation and send it via e-mail in an Adobe file. This particular loan we just closed.
Kristopher Gillmore
Fairfield Financial Services, Inc
16055 SW Walker Road, #247, Beaverton OR 97006
Phone (503) 319-7294 / Fax (503) 419-4219 / E-mail: gillmore@privatemoneysource.com
REAL ESTATE PROSPECTUS
SECURED LOAN
Purchase and rehab of property in Salem, OR
Loan Details
- Loan Amount: $107,500
- Term: 12 Months
- Interest Rate: 13%
- Monthly Payments: $1,764.58 Interest Only
- Security: Deed of Trust in 1st Position security interest in real property located at 4369 Boulder Ave, Salem OR.
- Construction Holdback: $22,000
- Interest Reserve: $3,530 (3 months)
- Projected Value by Borrower’s Estimate based on CMA: $165,000
- Projected LTV by Borrower’s Estimate based on CMA: 65%
Loan Overview
Mr. xxx and Mr. yyy are the members of xxx, LLC, and will be personally guaranteeing this loan. Mr. xxx is a licensed contractor and is the owner of his own construction company, yyy, LLC. He is very experienced in rehabbing houses and will be doing the work himself. His resume has been provided. To summarize the relationship between Mr. xxx and Mr. yyy: Mr yyyis the numbers/financial guy with good credit/income and Mr. xxx is the contractor.
This is the first loan that we’ve done with Mr. xxx and Mr. yyy, but their ultimate goal is to become a solid repeat borrower with the opportunity for us to do more loans in the future.
The borrowers are purchasing this property for $88,400, and are anticipating $22,000 in repairs. Essentially, the entire interior will be getting a face lift, with new paint, drywall (where required) flooring, appliances, with funds also allocated for the replacement of the roof and some landscaping. The budget for repairs has been provided for your review. They are putting approximately $16,000 down, which includes a 3 month interest reserve.
Property Info / Valuation
The property has 4 bedrooms, 2.5 baths, and is currently 1,900+ Square feet, counting the garage that was converted into living space. The conversion was not permitted, and the work on that conversion was minimal (carpet on the concrete, no heat, etc…), so that space will be converted back to a garage. After that space is converted back to a garage, the square footage should be approx. 1,600 + some storage space in the upstairs. The house was built in 1970 and sits on a 6,565 sf lot with a fenced back yard. Photos of the property have been provided.
The borrowers have provided a CMA with both sold comps and active listings. Based on the avg. $/Square foot, the borrowers are estimating an ARV of approximately $165,000
This CMA has been provided for your review.
Income
A signed 1003 has been provided. Mr. yyy is stating a monthly income of $8,125, and a net worth of $191,180. Mr. xxx has stated an annual income of $60,000, but the details of his assets and liabilities are pending (and will be provided presently).
Credit
Mr. yyy has a mid-credit score of 679, with no accounts past due, and no accounts with any late payments.
Mr. xxx’s mid-credit score is 485. He has reported that his credit is deteriorated because of medical expenses that he incurred in 2010. He has not yet been able to catch up with those bills.
Note – Initially Mr. yyy was going to guarantee this loan alone, because he’s the only with decent financials. However, I told them that it would be more beneficial to have a weak borrower on the hook as well. Mr. xxx’s personal financials and credit are not good, but his additional personal guarantee certainly doesn’t hurt.
– Clay (clay@privatemoneysource.com, 503-476-2909 or 800-971-1858)
Clay is Vice President of Fairfield Financial, a primary source for private money loans since 1964. Fairfield works with a broad range of private money investors, in a broker capacity, finding, underwriting, presenting, closing, servicing, and when necessary, assisting in the workout of difficult loans.
Tags: hard money investing, hard money lending, hard money loans, investing, loan underwriting, private money investing, private money lending, private money loans, trust deed investing, trust deed lending, trust deed loans
