Private Money Source Investor Blog

The cost of hard money

October 23rd, 2015

Clay Sparkman

After 50 years in the hard money business (as a family operation) and 20+ years personally, you’d think we’d know what to expect. But let’s face it, no one really knows what to expect in the complex globally based financial world.

For my first 15 or so years working in the hard money industry, I was always amazed that no matter what conventional rates seemed to do, hard money rates seemed to remain amazingly constant. Rates pretty much always fell into the 10-15% range, with 13% being, more or less, our mean and our median rates. Fees pretty much remained constant.

Over this past year we had to acknowledge the fact that we were having a tough time competing with others private money sources. We decided that we would have to face up to the fact that–with bank rates low and with many more banks lending–the cost of hard money had simply fallen. We lowered our rate range to 10-13%, with most of our loans being placed at 11%, and in certain cases, we lowered our front end fees.

Sure enough: We began securing more high quality loans, our lenders were happy to invest at 11% (still a darned good rate for a solid loan secured by real property), and we were willing to take a hit in our fees from time to time in order to increase our overall loan flow.

Now, we must remain vigilant. Real estate starts and prices seem to be leveling off a bit, and this would tend to lead to higher bank rates and thus higher hard money rates–but for now this is where we stand.

I would be interested to hear the prognostications of any of my readers, so please feel free to comment.

– 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: economy, hard money investing, hard money lending, hard money loans, investing, private money investing, private money lending, private money loans, real estate investing, trust deed investing, trust deed loans
Posted in Analysis, Real estate market general | No Comments »

Loan offering in Portland, Oregon

April 29th, 2014

Clay Sparkman

We’ve had a lot of nice solid little loans come in lately. (As you know, we have a tradition of, from time to time, presenting one of the loans that we have placed or are in the process of placing, so that blog readers can (a) see the types of loans that we are placing, (b) see how we feel that loans should be presented, and (c) be presented with potential investment opportunities.) Keep in mind that this is only the summary. If an investor expresses interest in reviewing the details of a loan, we put the prospectus on top of all of the relevant documentation and send it via e-mail in an Adobe file.

This particular loan is live and we are in the process of placing it as either a fractional or a whole loan, so if you are an accredited investor looking to put a relatively small amount into a fractional loan at this time, please let us know.

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

New construction of property located on SE Fir, Portland OR 97206

Loan Details

Loan Amount: $190,000
Term: 6 Months – with automatic monthly extensions (automatic extension not to exceed an additional 6 months) provided that the payments are timely and the loan is in good standing
Interest Rate: 12%
Monthly Payments: $1,900 Interest Only
Security: Deed of Trust in 1st Position security interest in real property located at xxx, Portland OR
Construction Holdback: $180,000
Projected Value by Borrower’s Estimate based on CMA: $285,000
Projected LTV by Borrower’s Estimate based on CMA: 67%

Loan Overview

yyy and zzz are the members of aaa, LLC, and will be personally guaranteeing this loan. Dave Sheldon is a licensed contractor and is the owner of his own construction company, Home Resources, LLC. zzz is very experienced in rehabbing houses and will be doing the work himself. His resume has been provided. To summarize the relationship between yyy and zzz – yyy is the numbers/financial guy with good credit/income and zzz is the contractor.

The borrowers purchased a lot in March of 2014 for $55,000, and have invested approximately $49,675 into the lot to divide the lot into 2 separate buildable lots, totaling $104,675. A list of these costs has been provided in the full packet for your review. It should be noted that $30,000 of the $180,000 construction holdback is allocated for site development costs reimbursed to the borrower through the draw process. Overall, they have a fair amount of skin in the game on this transaction.

The borrowers have secured a different private money loan for new construction on one of those lots, and are requesting this loan through Fairfield to provide funds for new construction on the other lot. It is their intention to build both houses together to reduce the costs.

The borrower’s intend to exit this loan with the sale of the property.

Pervious Projects with Fairfield

This will be the Third loan that we’ve done with John and yyy and zzz.

The first loan was a purchase rehab loan on a property in Salem, OR, with a construction budget of $22,000. All of their interest payments were on time, and the construction was completed under budget in approximately 3 months. The property has been sold, and the total length of the loan was approx. 8 months. The borrowers have posted photos of the construction by date (including the original pre-construction photos) which can be viewed at: http://s1062.photobucket.com/user/hisfinancing/library/Boulder/Boulder26JUN2013?sort=3&page=1 . Note – there are other projects on here as well. The Boulder property was the subject for the above mentioned loan.

The Second Loan was a purchase and rehab loan on a property in Hubbard, OR with a $40,000 rehab budget. This loan was originated approximately 4 months ago, and the construction was also completed on budget in approximately 3 months. The loan is in good standing and all of the interest payments have been on time. Photos of the work can be seen at: http://s1062.photobucket.com/user/hisfinancing/library/3484%20Hillside%20Court?sort=3&page=1 . This property is currently for sale, and the listing can be viewed at: http://www.redfin.com/OR/Hubbard/3484-Hillside-Ct-97032/home/26356992

Property Info / Valuation

The borrower’s will be building a 3 bedroom, 2.5 bathroom 2 story craftsman with a 1 car garage. The home will be 1,800 square feet, and on a 3,700 square foot lot. Plans for the property as well as a line item budget have been provided in the full packet for your review.

A CMA has been provided by the borrower’s realtor, which based on an average sold $/sf of $159, the borrower estimates a completed value of $285,000. This CMA has been provided in the full packet for your review.

Income

A signed 1003 has been provided. Yyy is stating a monthly income of $8,125, and a worth of $222,279. Zzz has stated an annual income of $60,000, and a net worth of $197,000

Credit

yyy has a mid-credit score of 722, with no accounts past due, and no accounts with any late payments.

Zzz’s mid-credit score was last reported (from the 1^st loan) to be 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 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. Zzz’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)

Posted in Uncategorized | No Comments »

Rehab loan in WA state

April 14th, 2014

Clay Sparkman

This particular loan is live and we are in the process of placing it as a fractional loan, so if you are an accredited investor looking to put a relatively small amount into a fractional loan at this time, please let us know.

Kris Gillmore

Fairfield Financial Services, Inc

3327 SE 50th, Portland, OR 97206

Phone (503) 319-7294 / Fax (503) 419-4219 / E-mail: gillmore@privatemoneysource.com

REAL ESTATE PROSPECTUS

SECURED LOAN

Purchase and rehab of SFR in Vancouver, WA

Loan Details

Loan Amount: $395,000
Term: 12 months
Interest Rate: 12%
Monthly Payments: $3,950.00 Interest Only
Security: Deed of Trust in 1st Position security interest in real property at AAAAAAAAAA., Vancouver, WA
Construction holdback: 85,000
Completed Value based on Realtor’s Comps: 650,000
Completed LTV based on Realtor’s Comps: 61%

Loan Overview

XXX, an experienced contractor in CA is requesting funds for the purchase and rehab of a Single Family home in Vancouver, WA. The loan will be made to XXX’s company, YYY, Inc., and personally guaranteed by XXX. XXX’s brother, ZZZ, an experienced licensed contractor in WA, lives nearby and will be making the renovations to the property. ZZZ has been a contractor working on new construction and restoration since 2001. ZZZ’s license, bond, and insurance info can be seen at:

He has thoroughly inspected the property and reports that structurally the house is sound, only needing cosmetic upgrades to appeal to consumers at this price point.

The purchase price of the property is $359,000 and the borrower will be making a down payment of $75,000. The cost of repairs is $85,000, and the property will be getting a new roof, flooring, paint, with upgrades to the appliances, cabinetry, and fixtures. A copy of the construction budget has been provided for your review.

The borrower intends to exit this loan with the sale of the property.

Property

The subject property was built in 1995 and is 4,782 square feet, with 5 bedrooms, 3.5 baths, and sits on .29 acres with a river view. The property is on a corner lot, and the borrower’s realtor reports that the property is in a highly desired neighborhood. Photos of the property have been provided in the packet for your review.

Valuation

The borrower’s realtor has provided a CMA with a suggested after repair value of $650,000. She provides 4 sold comps in the past year of similar properties, but does reference a similar sized property that’s currently listed for $549,000. She reports that this listing is inferior to the subject because of the dated interior, which is critical when selling a home at this price point. The CMA has been provided for your review, and the realtor will be available by phone should there be any questions you wish to discuss with her directly.

In addition – a property inspection to further evaluate the comps and construction budget is pending

Income

XXX has provided a signed 1003 and reports an annual income of $203,000, and a net worth of $488,600.

Credit

XXX has a mid-credit score of 533. He has several disputed accounts and an erroneous tax lien, for which he has provided a written letter of explanation. Currently, XXX only has 2 outstanding loans: a HELOC and a student loan. Both are currently in good standing.

—

– Clay (clay@privatemoneysource.com, 503-476-2909 or 800-971-1858)

Tags: hard money investing, hard money loans, private money investing, private money lending, private money loans, trust deed investing, trust deed lending, trust deed loans, Washington
Posted in Available loans, Case studies, Rehab loans, Washington | No Comments »

Loan offering in Washington state

October 17th, 2013

Clay Sparkman

We’ve had a lot of nice solid little loans come in lately. (As you know, we have a tradition of, from time to time, presenting 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, (b) how we feel that loans should be presented, and (c) be presented with potential investment opportunities.) Keep in mind that this is only the summary. If an investor expresses interest in reviewing the details of a loan, we put the prospectus on top of all of the relevant documentation and send it via e-mail in an Adobe file.

Kristopher Gillmore

Fairfield Financial Services, Inc

3327 SE 50th St, Portland, OR 97006

Phone (503) 319-7294 / Fax (503) 419-4219 / E-mail: gillmore@privatemoneysource.com

REAL ESTATE PROSPECTUS

SECURED LOAN

Refi and construction of SFR Ridgefield, WA, with additional industrial zoned land as cross collateral.

Loan Details

Loan Amount: $262,000
Term: 24 Months
Interest Rate: 12%
Monthly Payments: $2,620 Interest Only
Security: Deed of Trust in 1st Position security interest in real property at XXX, WA
Construction Holdback: $98,903
Cash out to pay extension fee on existing land loan: $13,000
Projected Value by lowest $/SF on BPO: $416,926
Projected LTV based on BPO: 63%

Additional Collateral security: Deed of Trust in 3^rd Position in real property at YYY, WA

11. As-Is Value of Additional Collateral based on BPO: $550,000

Current liens on Additional Collateral: approx. $300,000

NOTE – the Additional Collateral does strengthen the loan as there is additional security, but has not been used in any LTV calculations.

Loan Overview

XXX currently owns the subject property held by his company, YYY, LLC. This property is over 100 years old, and has been in XXX’s family the entire time. After falling on hard times and losing the property in a foreclosure in 2011, XXX re-acquired this property in February of 2012 with a purchase loan through Fairfield. The purchase price was $170,000 and after closing costs and all other fees, XXX made a down payment of approximately $74,000 to purchase the property. The principal balance of the loan is currently $125,000

Currently, XXX is requesting funds to refi the existing loan and an additional $99,000 to be held in a construction holdback account for the expansion and updates to the house. The construction funds will be used to add 1,300 square feet of living space, a new upstairs bathroom, grandmother’s quarters, full wrap around porch, and 2 a car garage. A line item budget has been provided for the proposed work.

In addition, he is also requesting $13,000 to be used to pay the extension fees on an existing land loan for a property that XXX owns with his father. The land has a current 1^st of $150,000, as well as an IRS lien for $150,000. It has been reported that the IRS lien is inaccurate, and will be reduced to somewhere in the range of $8,000 to $20,000. A representative of the IRS has signed a statement from the borrower saying that this is accurate (the IRS representative was unable to write the letter herself – but agreed to sign it if it was prepared by the borrower and accurate). Ultimately, the combined 1^st and 2^nd on this land should be no more than $170,000. To strengthen the loan (and to compensate for the cash out), this property can be used as additional cross collateral for the loan, and is valued by a BPO at $550,000.

XXX’s pay history for the past 18 months has been solid, (with the exception of a payment in January 2013 that was 2 days late, and his most recent payment, which was late because XXX thought he’d be able to refinance the loan before that payment was due). The loan is currently in good standing.

As the property has been in XXX’s family for over 100 years, he intends to keep it that way and plans exit the loan with a conventional refinance. He is currently holding this property as an investment property under his company, YYY, and will continue to do so.

Property

Primary Collateral

Currently, the property is 1,580 square feet, with 3 bedrooms and 1 bathroom. It sits on a level 4.6 acre lot with several outbuildings and was built in 1901. He plans to expand the house to 2,880 square feet with an additional bathroom, grandmother’s quarters, full wrap around porch, and 2 a car garage. A line item budget is provided in the packet, and plans can be provided upon request.

Cross Collateral

The secondary collateral is two unimproved 5 acre lots with Commercial zoning, located just south of the core “XXX” Industrial warehouse district, and just north of the commercial district near the YYY County Fairgrounds. Utilities, including city sewer, water, and electricity are available at the road. Currently, the lots are owned by XXX and his father, ZZZ. XXX will eventually be buying his father out, and plans to do so with a long term refi after the IRS liens get sorted out. A BPO with photos of the property is provided in the packet.

Valuation

Primary Collateral Projected Value – A BPO has been provided by a local realtor. Using 3 sold comps and 3 active listings; he estimates a value of $500,000, subject to the completion of the proposed construction. This BPO is provided in the full packet for your review.

NOTE: The realtor does report that there are not a lot of comps available for homes of this age, as not many of them remain, and that there is a wide range of values. (However, keep in mind that the effective age of the property will be significantly less and more in line with current values) The Lowest $/SF of the sold comps provided is $146.80/SF, while the lowest $/SF of the active listings provided is $149.47/SF. Using the projected square footage of the subject property times the lowest $/SF of all the sold/active comps would yield a value of $416,926. For the purposes of this report, this more conservative number is used in the LTV calculation.

A formal appraisal has been ordered to give additional support to the valuation. This will be available for review as soon as we receive the report.

Cross Collateral

The same realtor has provided another BPO with 3 sold comps and 3 listings for this property as well. He reports that there are very limited sold comps, and the most weight is given to a listing with a very similar property within one mile from the subject. Note – this listing has been on the market for 2 years at $550,000, so a sale price at $550,000 for the Cross collateral seems optimistic. This BPO has been provided for your review.

Income

XXX owns his own trucking company, which reported a gross income of $414,000 in 2012. Bank statements have been provided to verify this income. A P&L has been provided, and his net income is reported to be $65,940. It should be noted that his company is currently paying all of his personal expenses (house payment, cell phone, food, land loan interest payments, etc…). With these personal expenses being considered income, that would yield a net personal income of approximately $94,000

Credit

XXX has a mid-credit score of 662. He went through some financial troubles about 3 years ago, but since has cleaned up his credit, and is current on all his accounts. Currently, he only has 3 balances being reported.

—

– Clay (clay@privatemoneysource.com, 503-476-2909 or 800-971-1858)

Tags: hard money investing, hard money loans, loan underwriting, private money investing, private money loans, trust deed investing, trust deed lending, trust deed loans, Washington
Posted in Available loans, Case studies, Construction loans, Rehab loans, Washington | No Comments »

Rehab loan offering in Oregon

October 3rd, 2013

S. Clay Sparkman

We’ve had a lot of nice solid little loans come in lately. As you know, we have a tradition of, from time to time, presenting 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, (b) how we feel that loans should be presented, and (c) be presented with potential investment opportunities. Keep in mind that this is only the summary. If an investor expresses interest in reviewing the details of a loan, we put the prospectus on top of all of the relevant documentation and send it via e-mail in an Adobe file. This particular loan is live and we are in the process of placing it, so if you have an interest, please let us know.

Kristopher Gillmore

Fairfield Financial Services, Inc

3327 SE 50th St, Portland, OR 97006

Phone (503) 319-7294 / Fax (503) 419-4219 / E-mail: gillmore@privatemoneysource.com

REAL ESTATE PROSPECTUS

SECURED LOAN

Loan against two properties: The use of funds for Subject property 1 is for cash out and rehab. This property is free and clear. The use of funds for Subject property 2 is a for the purchase and rehab of the property

Loan Details

Loan Amount: $330,000
Term: 24 Months
Interest Rate: 12%
Monthly Payments: $3,300 Interest Only
6 month Interest Reserve: $19,872

Security: (Subject 1) Deed of Trust in 1st Position security interest in real property at xxx, Nehalem OR
Subject 1 As-Is Value by Borrower’s Estimate: $180,000
Construction Holdback Subject 1: $25,515
Subject 1 Projected Value by Borrower’s Estimate/comps: $240,00

Security: (Subject 2) Deed of Trust in 1^st Position in real property at ^yyy, Nehalem, OR
Subject 2 As-Is Value by Borrower’s Estimate/Tax Assessed Value: $267,000
Construction Holdback Subject 2: $26,618
Subject 2 Projected Value by Borrower’s Estimate/comps: $320,000

Combined As-Is Value by Borrower’s Estimate: $447,777
Front End CLTV by Borrower’s Estimate: 63%
Total Combined Projected Value of Subject 1 and Subject 2 by Borrower’s Estimate/comps: $560,000
Total CLTV based on Projected Value by Borrower’s Estimate/comps: 59%

Loan Overview

The Borrower, xxx, under her company yyy, LLC is looking for a $330,000 loan secured by two properties. Subject 1 is currently free and clear with the exception of some property tax liens that will be paid at closing. Subject 2 is currently under contract for purchase at $161,000. Details on each property are provided below.

xxx is an experienced rehabber, who reported to have purchased and sold 7 houses, two of which were over 100 years old. Furthermore, she grew up in a construction oriented family. Her father, brother, and nephew are roofers, and she also has contractors, concrete professionals, painters, and a plumber in the family.

Subject 1

xxx, under her company yyy, LLC, owns this property free and clear. She reports investing approximately $30,000 for improvements to the property, and is requesting $25,515 to complete the renovation. The budget with proposed improvements, as well as a list of completed improvements has been provided for your review.

The property was built in 1954, and is 1,684 Square feet on .36 acres. The property has 3 bedrooms, 2 baths, and covered carport. The property is currently vacant and in the process of being renovated.

Subject 2

xxx currently has this property under contract for $161,000. She believes this is greatly undervalued, and that the bank that owns the property doesn’t know what they have. The current tax assessed value of this property is $267,000, which is what xxx believes to be a more realistic as-is value. She is requesting $26,618 for cosmetic renovations to this property. The budget and list of proposed improvements has been provided for your review.

This property was built in 1920, and is 2,688 square feet on 1.04 acres. It has 6 Bedrooms, 2 bathrooms, a parlor, laundry room, 2 car garage, and 10 foot ceilings throughout the house.

Exit Strategy

The borrower will exit this loan through the sale of the properties, and has requested a release clause to allow for individual sales of the property.

Property / Valuation

Comps have been provided by a local realtor and were used to estimate the completion values of each property. These comps can be viewed through the following link: www.xxx

The borrower feels that after the renovations, her properties will be just as nice as the comps, but will be superior in location. Ultimately, she believes that she will be able to sell Subject 1 for approximately $240,000 and Subject 2 for approximately $340,000

A site visit by one of Fairfield’s inspectors is scheduled for 10/7 (pending a tentative commitment of funds) in order to evaluate the sufficiency of the borrower’s construction budgets as well as evaluate the comps that she has provided.

Income

A signed 1003 has been provided by the borrower, who is stating a monthly income of $5,000 and a net worth of $222,000.

In addition, there is 6 months of interest reserve included in this loan which will allow her to build her cash reserves. If she is unable to sell either of the properties within this time frame, she is confident that she’ll be able to service the debt from her cash reserves and monthly income.

Credit

xxx has a mid-credit score of 612. Her credit report shows very little debt – a total of $2,632

—

– Clay (clay@privatemoneysource.com, 503-476-2909 or 800-971-1858)

Tags: hard money investing, hard money loans, investing, loan underwriting, Oregon, private money investing, private money lending, private money loans, trust deed investing, trust deed lending, trust deed loans
Posted in Case studies, Investor presentation, Offerings, Oregon, Rehab loans, Uncategorized, Underwriting | No Comments »

A private money loan offering

September 11th, 2013

Clay Sparkman

We are in the process of placing a loan that I really like. We have worked with these borrowers in the past and they have been excellent in both payment and performance.

It has to happen pretty fast (by 9/20, a week from Thursday), and we will most likely place it as a fractional loan (though there is the possibility that–given the tight time frame–we would elect to place it with a single lender.

The prospectus is included below that so you can have a quick fly-over. Is this something that you would consider pursuing?

Let me know. I have a full packet ready to go, and can send it out for you to review, right away, if you have a serious interest.

Kris Gillmore

Fairfield Financial Services, Inc

3327 SE 50^th, Portland OR 97206

Phone 503-319-7294, e-mail: gillmore@privatemoneysource.com

REAL ESTATE PROSPECTUS

SECURED LOAN

A cash out refi of eight bungalow vacation rentals in a popular coastal town in Washington State—both a tourist destination and a desirable community

Loan Details

Loan Amount: $670,000
Term: 3-5 years
Requested Interest Rate: 12%
Security: Deed of Trust in 1^st Position security interest in real property at XXX, WA, 98569
Value by Borrower estimate/comps: $960,000 – 1,032,000
LTV by Borrower estimate/comps: 65 – 70%

Loan Overview

YYY and ZZZ are a successful Realtor/Builder husband and wife team. XXX is a prominent realtor in the town in which the property is located, as well as the owner/manager of a property management company. YYY is a licensed contractor and skilled home builder specializing in small high end homes/cottages.

XXX and YYY took out a private money construction loan in 2011 in order to build eight small bungalows intended for individual sale. The commercial zoning of the property allows for these bungalows to be used as residences or vacation rentals. More recently, upon consideration of the potential rental income, they have decided to keep these units as rentals.

Their initial lender has agreed to extend, but only as a rate and term refinance. They would prefer to pull some cash out for addition furnishings and funds to market the rentals and would prefer a longer term. Ideally they’d be looking for a loan of 3-5 years, and will exit the loan with a long term conventional refinance of the property. (It should be noted that they have an alternate back-up plan of selling individual units, should their primary exit strategy fail them.) The loan would be held under their company, QQQ, LLC, with personal guarantees by both XXX and YYY.

Borrower History

This will be our 3^rd loan with XXX and YYY. The two previous loans were both for the construction of small cottages, relatively similar to the subject property. Their performance with regard to the construction was excellent, as was their pay history. They exited both these loans with the sale of the properties as planned, with prices on par with their initial projections of value.

Property

Each of the eight units are 432 square feet, with one bedroom, one bath, and loft space that will sleep four people. They are new construction (with construction beginning at the end of 2011) with a total cost of $755,000 (including soft costs). Photos and additional descriptions of the property may be viewed on their website at: www.AAA.

Valuation

XXX has provided several comps, mainly consisting of property that they have built and sold themselves, as well as one additional commercial zoned property on BBB Dr. She believes that these units could sell at $120,000 each. (Note: on her 1003, XXX lists the value of these units at 1,032,000, which is slightly higher than the estimate of $120,000 each, or $960,000 total.)

XXX has also commented that their units have always sold for a higher price per square foot than other new construction in the area due to the quality of the construction and components, and she expects the same for these. Also note that smaller property tends to sell for a high price/square foot than larger property, and with the efficient layout and detailed high quality of construction plus the commercial zoning, these units should be able to be sold at a premium.

Currently, these units are listed for sale at $150,000. XXX has stated that they are not doing much to market the sale of these properties as they intend to keep them as long term rentals, but at this price point, they would consider selling. They have made it clear that they would not want to sell any of the properties for much less than $150,000.

Rental Income

Five of the eight units have been available for rent beginning in June. A detailed breakdown of the rental income from June – August 26^th has been provided showing a gross income of $46,343. XXX has provided the following comments regarding this income:

“Please note that not all units were in service the entire time. We started with Bungalow 1 in June and added 2, 4 &5 by July 4th. We then added 6 & 7 and then finally, 8. We are still working on 3 as it is the ADA unit and is modified so we need to furnish slightly differently. We hope to have three up and running shortly.

As you can see, the income is pretty good even with our late start, and we are also starting to see reservations start coming in for the fall which is promising for our slower season.”

They anticipate that they can reach 50% occupancy within a year, at which point the property should generate approx. $140,000+/year. Because they own their own property management company and YYY is able to perform all the maintenance (which should be minimal as this is new construction), expenses will be minimal.

Financial Status

Fairfield was provided with a 1003 for XXX and YYY, who will be personally guarantying the loan. They state a monthly income of $33,133 and a net worth of $1,313,609. In addition to the 1003, they have also provided a chart of their liabilities and real estate owned. These items have been provided and are bookmarked separately in the packet.

Credit

XXX and YYY both have fairly consistent credit scores in the mid to upper 600’s. Their credit payment history is excellent, with the exception of one 30 day late payment that they are disputing. The loan in which that late payment allegedly occurred has been paid in full. A credit report has been provided as a separate attachment.

—

– Clay (clay@privatemoneysource.com, 503-476-2909 or 800-971-1858)

Tags: hard money investing, hard money lending, hard money loans, investing, private money investing, private money lending, private money loans, real estate investing, real estate rental, trust deed investing, trust deed lending, trust deed loans, Washington
Posted in Available loans, Offerings, Washington | No Comments »

Sweet private money loans

August 27th, 2013

Clay Sparkman

Historically we have placed loans in the 12-14% range, but in the current market we are finding that this may be a bit high. Especially if a lender is willing to come down to 10-11%, there are little golden nuggets of opportunity presenting themselves.

Here, by way of example, is a loan that we just placed. (The prospectus has been redacted to protect the privacy of the parties involved.)

What’s not to like?

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 LOAN SUMMARY

SECURED LOAN

Rate and Term refinance of property in Superior, Colorado.

Loan Details

Loan Amount: $158,000
Term: 3 years
Interest Rate: 10%
Monthly Payments: $1,316.67 Interest Only
Security: Deed of Trust in 1st Position security interest in real property located at XXX, Superior Colorado.
Estimated Value, based on purchase price in May, 2011: $650,000
Estimated LTV based on purchase price in May, 2011: 24%

Loan Overview

This property was purchased on May 31^st, 2011 by XXX LLC, with a guarantee by XXX, who is occupying the property part time. The purchase price was $648,900, and the initial loan was $325,000 with a down payment of approximately $350,000. After a year of interest only payments, the loan was paid in full.

Shortly after the loan was paid off, the borrower had an investment opportunity and borrowed 150,000 secured by the same property. The pay history on this loan has been excellent, with one late payment that was promptly submitted after we contacted the borrower (XXX had his payments set up through an auto pay with his bank, but the auto pay expired after one year and he became aware of this after we followed up on the missed payment). The borrower wishes to keep this loan in place, but is looking for a longer term loan at a lower interest rate. The loan would be made to XXX, LLC, with a personal guarantee by XXX.

Property

The subject property is a 5 bedroom, 5 bath, single family residence with 4,321 square feet of living space, including a finished basement. The property sits on a 10,013 sf lot, and was built in 1998. More detailed specs on the property can be viewed at XXX. Updated interior and exterior photos are pending and will be provided in the full loan packet.

In May of 2011, we performed an inspection of the property and comps that were provided by the borrower. That report has been provided as a separate attachment.

Personal Financials

XXX has provided a signed 1003 stating a monthly income of $20,000 and a net worth of $796,000

Credit

XXX has a mid credit score of 581, and has provided a detailed explanation (attached) as to the circumstances that brought his credit score to be so low.

—

– Clay (clay@privatemoneysource.com, 503-476-2909 or 800-971-1858)

Tags: hard money investing, hard money lending, hard money loans, investing, private money investing, private money lending, private money loans, trust deed investing, trust deed lending, trust deed loans
Posted in Case studies | No Comments »

Fix and flip big

August 21st, 2013

Clay Sparkman

This is interesting. I had wondered why we have not seen as many REO type fix and flip property loans as I had expected. I was informed by an individual quite recently that they had read an article about two very large entities that were going to the banks and buying all of the REO properties in blocks–thus leaving little if nothing for the small investors.

This article, with an eye on California, gives and additional perspective on that issue.

Does anyone out there have additional perspective which they would be willing to share?

– Clay (clay@privatemoneysource.com, 503-476-2909 or 800-971-1858)

Tags: hard money investing, hard money lending, private money investing, private money lending, private money loans, trust deed investing, trust deed lending, trust deed loans
Posted in Analysis, Rehab loans, REO properties | No Comments »

We may be done wandering through the forest

June 27th, 2013

Clay Sparkman

I got this upbeat article as a special alert on my smart phone this week. It seems that finally the real estate market it pulling the rest of the economy forward, instead of the other way around. I would say that it’s official. Hallelujah!

Housing, regional factory data show economy’s stamina
http://us.news-republic.com/Web/ArticleWeb.aspx?regionid=1&articleid=10246360

On the other hand, a little later on the same day, I received this downbeat article on my cell phone as a special alert.

Stocks extend slide as China adds to worries
http://us.news-republic.com/Web/ArticleWeb.aspx?regionid=1&articleid=10251079

What is the take away? I get two things of substance right away: (1) Congratulations to all of you out there who work and/or invest in the real estate market. Things are really beginning to look up (after falling from a cliff, getting up, assessing our injuries, and then shuffling, wounded and aimless, through the forest—only occasionally to glimpse something that might be a road or a home, but ultimately to find that it was simply an illusion), and (2) I don’t advise people on what sectors they should be putting their money into, nor in what proportions, but I suspect that the trends indicated by these two hard hitting articles (all in the same day, no less) might just might persuade some people to move a portion of their investment portfolio from the stock market to the real estate market–either in the form of direct real estate holdings, as trust deeds secured by real estate, or otherwise perhaps as a share in a real estate pool or a REIT.

– Clay (clay@privatemoneysource.com, 503-476-2909 or 800-971-1858)

Tags: economy, hard money investing, hard money loans, investing, private money investing, private money lending, private money loans, real estate, real estate investing, trust deed investing, trust deed lending, trust deed loans
Posted in Analysis, Ramblings of a blogger, Real estate market general, Risk analysis | No Comments »

Auto-private-money-fractional-lending

June 13th, 2013

Clay Sparkman

This is an interesting blog post.

http://www.mymoneyblog.com/realty-mogul-review.html

It tells about a new site where you can go to make $5k private money fractional loans automatically, without the bother of actually dealing with a broker, borrower, or such. Apparently you don’t have to even bother making any decisions about the investment. That might be nice, except …!

Well I’m not going to offer any real opinions. I’d like to know what you all think about it. Does anyone out there want to weight in on private money lending of this sort, and how they feel about it?

Please do. It would be nice to hear some feedback.

– Clay (clay@privatemoneysource.com, 503-476-2909 or 800-971-1858)

Tags: hard money investing, hard money lending, hard money loans, investing, private money investing, private money lending, private money loans, real estate investing, trust deed investing, trust deed lending, trust deed loans
Posted in Private money lending - general | No Comments »