{"id":400,"date":"2011-01-18T09:39:56","date_gmt":"2011-01-18T16:39:56","guid":{"rendered":"http:\/\/privatemoneysource.com\/blog\/?p=400"},"modified":"2011-01-18T09:39:56","modified_gmt":"2011-01-18T16:39:56","slug":"a-private-money-loan-prospectus","status":"publish","type":"post","link":"https:\/\/privatemoneysource.com\/blog\/?p=400","title":{"rendered":"A private money loan prospectus"},"content":{"rendered":"

Clay Sparkman<\/em><\/p>\n

I’m not sure how many of you have made loans with us before, so I thought I would post a prospectus for a loan that we are currently in the process of placing.\u00a0 The prospectus which is shown here is the high level presentation, or executive summary of the loan.\u00a0 Having read the prospectus you should have a pretty good idea what the loan\/borrower\/project is all about and what this loan looks like as a potential investment.<\/p>\n

When an investor wishes to fully evaluate a loan investment, we send a full package in Adobe Acrobat format (generally between 50 and 200 pages) password protected, and with backup documentation to support and inform the investor in detail regarding the known relevant particulars of the proposed loan.<\/p>\n

If you are interested in discussing private money loans in general or this one in particular, you may contact me at sparkman@lendicom.com or Kris Gillmore, who is coordinating this loan, at 503-319-7294, or gillmore@privatemoneysource.com.<\/p>\n

Kris Gillmore<\/p>\n

Fairfield Financial Services, Inc<\/strong><\/p>\n

2727 NW Hoyt St, Portland, OR 97232<\/p>\n

Phone 503-319-7294, e-mail: gillmore@privatemoneysource.com<\/p>\n

\n

REAL ESTATE PROSPECTUS<\/span><\/strong><\/p>\n

SECURED LOAN<\/span><\/strong><\/p>\n

Construction funds for a single-family home in Portland, Oregon.<\/p>\n

Loan Details<\/span><\/strong><\/p>\n

    \n
  1. Loan Amount: $355,000<\/li>\n
  2. Term: 1 year<\/li>\n
  3. Interest Rate:\u00a0 13%<\/li>\n
  4. Monthly Payment: $3,845.83<\/li>\n
  5. Construction Holdback Account: $157,000<\/li>\n
  6. Interest Reserve:\u00a0 $11,574 (The borrower will make \u00bd the monthly payment out of pocket effectively making this a 6 month partial reserve)<\/li>\n
  7. Security:\u00a0 Deed of Trust in 1st<\/sup> Position security interest in real property located in Portland, Oregon<\/li>\n
  8. Combined As-Is Value by Borrower \/ Realtor estimate:\u00a0 $282,000<\/li>\n
  9. Combined Front End LTV:\u00a0 70%<\/li>\n
  10. Combined Projected Value by Borrower \/ Realtor estimate:\u00a0 $525,000<\/li>\n
  11. Combined Projected LTV:\u00a0 67%<\/li>\n<\/ol>\n

    Loan Overview<\/span><\/strong><\/p>\n

    The proceeds of this loan will be used to pay off an existing hard money loan.\u00a0 The construction funds will be used to build a single-family residence with a full daylight basement that can be rented as a separate apartment.<\/p>\n

    The borrowers acquired these two lots in 2006. Additionally, they also acquired the property behind these lots with a house in need of repair.\u00a0 They rehabbed the house, which is now held as a rental, and put in a road to access lots 2 and 3.\u00a0 After the acquisition of this property, the borrowers invested approximately $42,000 out of pocket into the lot development.\u00a0 They report that this figure does not include their time and labor.\u00a0 The two parcels being used as collateral have been fully developed and are prepped for vertical construction.\u00a0 Once construction on lot 3 has been completed and sold, the borrowers intend to build another spec home on lot 2.\u00a0 The borrower\u2019s have carefully planned the development and construction of these three lots, and they\u2019ve been successful in their execution of this plan so far.\u00a0 The borrowers are not bringing in any cash to close this loan, but they do have approximately $100,000 in equity that they are pledging as collateral.<\/p>\n

    The borrowers plan to exit this loan with the sale of the property. \u00a0They believe that the basement apartment and view will make the property more attractive than other properties currently listed in this area. \u00a0As a contingency, if the property does not sell, the borrower intends to rent both units and seek a conventional mortgage. \u00a0Total income is projected at $2,250 per month if both units are rented.<\/p>\n

    <\/span><\/strong><\/p>\n

    Property<\/span><\/strong><\/p>\n

    The property consists of two similar lots (lot 2 and lot 3), although construction will only occur initially on lot 3.\u00a0 Lot 3 is 4,750sf, with sewer, water, power, phone, and cable on site.\u00a0 This property has a partial view looking south east towards Milwaukie.\u00a0 Photos of the lots have been provided<\/p>\n

    The proposed single family residence will be 2,680sf, with 4 bedrooms and 3.5 baths.\u00a0 There will be a two car garage, and two fireplaces.\u00a0 This home will also have central air, granite countertops, stainless steel appliances, and will include a finished live-in basement that can be rented as a separate unit.\u00a0 Half of the basement walls will be exposed with windows, and will be more like a first floor than a traditional basement.<\/p>\n

    Valuation<\/span><\/strong><\/p>\n

    As-Is Value<\/span><\/p>\n

    Based on recent comps provided by the borrowers, they estimate the value of lot 2 to be $132,000.\u00a0 Lot 3 is approx. 2000sf smaller, and by the same comps the borrower estimates a bare land value of $115,000.\u00a0 Considering the amount of work that has been done (excavation, footing, 6 months of engineering with the city, plans) the borrowers estimate a value of approximately $150,000.\u00a0 This is a combined estimated value of $282,000.<\/p>\n

    Projected Value<\/span><\/p>\n

    Recent comps were provided by the borrower.\u00a0 Based on these comps, the borrower and his realtor have decided to list the property for $410,000.\u00a0 A property inspection was performed by our VP, who reports that $410,000 seems like a reasonably conservative estimate of value.<\/p>\n

    When combined with lot 2 as cross collateral, the combined projected value of this property is $525,000<\/p>\n

    Financial Status<\/span><\/strong><\/p>\n

    Fairfield was provided with a signed 1003 for xxxx and yyyy.\u00a0 They state a combined gross income of $12,300 per month (this is an average amount based on xxxx\u2019s variable construction income) and a net worth of $208,595.\u00a0 A copy is provided for your review.<\/p>\n

    Credit<\/span><\/strong><\/p>\n

    xxxx has a mid-credit score of 528, while yyyy has a mid-credit score of 527.\u00a0 xxxx\u2019s income is variable, and he is currently having some cash flow issues.\u00a0 xxxx reports that he is expecting payment from a large project, and has another lined up.\u00a0 It should be noted that the borrowers have a perfect pay history with Fairfield over the past 2 years.<\/p>\n

    Experience<\/span><\/strong><\/p>\n

    xxxx reports that he has 40 years of construction experience.\u00a0 A resume of his work over the past 15 years is provided for your review.<\/p>\n

    <end of private money loan prospectus><\/p>\n

    — Clay (sparkman@lendicom.com, 503-476-2909 or 800-971-1858)<\/p>\n

    Clay is Vice President of Fairfield Financial, a primary source for private money loans since 1964.\u00a0 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.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

    Clay Sparkman I’m not sure how many of you have made loans with us before, so I thought I would post a prospectus for a loan that we are currently in the process of placing.\u00a0 The prospectus which is shown here is the high level presentation, or executive summary of the loan.\u00a0 Having read the […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_s2mail":""},"categories":[3,5,9,14],"tags":[40,41,42,43,48,49,50,51,54,58,59,60],"_links":{"self":[{"href":"https:\/\/privatemoneysource.com\/blog\/index.php?rest_route=\/wp\/v2\/posts\/400"}],"collection":[{"href":"https:\/\/privatemoneysource.com\/blog\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/privatemoneysource.com\/blog\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/privatemoneysource.com\/blog\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/privatemoneysource.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=400"}],"version-history":[{"count":0,"href":"https:\/\/privatemoneysource.com\/blog\/index.php?rest_route=\/wp\/v2\/posts\/400\/revisions"}],"wp:attachment":[{"href":"https:\/\/privatemoneysource.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=400"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/privatemoneysource.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=400"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/privatemoneysource.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=400"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}