Fairfield Financial Services, Inc. - Private Money Loans, Lending & Borrowing

The Private Money Broker

Home rehab season is here

April 5th, 2019

S. Clay Sparkman

Once again it is spring, and that means that its time for the builders season to get underway.  We finance new construction, but have also done a great many small rehab projects over the years.

The numbers indicate that rehab activity is down generally over this past few years. If I were calculating whether or not to get into the markets, I think that I would take that as a positive sign. Many times in the past, the competition from “professional buyers” has been so high that it has been difficult to buy the right home project at a low enough price. (I am sure you have heard it said (correctly I might add) that the money on fixer projects is made almost entirely on the buy. ) By my assessment this may be an ideal time to jump in.

Here is an article that deals with the question of how to finance your projects.

Typically our financing for a project can be had at 10-11% and 4 points for one year.

Below you will find a summary for a project that we just funded. It is a perfect example of the type of projects we like to do.

Thank you,

Clay, clay@privatemoneysource.com, 503.476.2909

===

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

Fix and Flip of SFR in Portland OR

Loan Details

  1. Loan Amount: $243,000
  2. Term: 18 Months
  3. Construction Holdback:  $50,650
  4. Interest Rate: 11%
  5. Monthly Payments: $2,227.50 Interest Only
  6. Security:  Deed of Trust in 1st Position security interest in real property located at XXXX N Seneca St. Portland OR, 97203
  7. Projected Value of property based on realtor comps:  $370,000
  8. ARV based on Realtor Comps: 66%

Loan Overview

Mr. XXXXXXXX (through his company XXXXXXXX, LLC) is requesting a loan to purchase, renovate, and flip a small SFR in Portland.  Mr. XXXXXXXX will personally guarantee the loan, and he is putting down approximately $35,000 down with cash out of pocket.  The purchase price of the property is $216,000, and the renovation budget is $50,650

Mr. XXXXXXXX has worked with Fairfield in the past as both a lender and a borrower. In a lender capacity, he’s made 2 loans with Fairfield, with one loan outstanding with an $80,000 share owned by Shane.  As borrower, he currently has a 7-unit rental property in Pendleton that was financed by Fairfield, with an outstanding balance of $180,000.  Mr. XXXXXXXX’s performance on this loan has been excellent, and he has set up an auto-pay through his bank, so he has a perfect pay history.

Property

The subject property was built in 1909, sits on a 50 x 100 SF lot, and has 2 bedrooms and 1 bathroom over a 924 SF main level.  There is also a 528 SF basement.  You can see more details on the property (not photos) at the following link: www.XXXXXXXX.

A certified home inspection was performed and included in the packet for review.  The inspection did not reveal any issues that Mr. XXXXXXXX was not already anticipating or already addressing in the budget provided.

Mr. XXXXXXXX will be hiring out some of the work, but he plans to do the bulk of the work himself.  Mr. XXXXXXXX used to carry a contractor’s license, and he has the skill, experience, and equipment to do the work.

There aren’t many photos of the property online, but photos have been included in the packet as well as the inspection report.

Valuation

Mr. XXXXXXXX and his realtor have provided 11 recent comps (9 are sold, 2 are pending) to come up with an ARV of 370K.  This works out to $254.82/SF

The comps vary with sold prices from $419,900 – 319,000, and $/SF ranging from $221/SF – $425/SF (the $425 is an outlier and is only 890/sf).  Only 2 of the houses have a sold $/SF in the $221 range.  The next lowest is $248, and the rest are all over $300/SF. There’s a strong correlation between the $/SF and the size of the houses, with the smaller houses (I would guess not including a basement) having the highest $/SF.

For a newly remodeled home, I think the $254/SF estimate is pretty reasonable.

These comps have been provided in the packet for your review.

Income

A Commercial application has been provided by the borrower.  Mr. XXXXXXXX reports an annual income of $81,000 and a net worth of $422,000.  However, this doesn’t reflect the new loan he recently funded with Fairfield, which would increase his net worth by $80,000.

Credit

A credit report has been provided separately from the packet.  This credit report is a bit on the old side (it was pulled on 11/30/18), but Mr. XXXXXXXX has excellent credit scores of 769, 794, and 797 as shown on this report.

Sunshine and hard money

March 19th, 2019

Clay Sparkman

Summer is just around the corner!

In the Pacific Northwest, that means it is time to play–or for those who are investing in real estate projects, perhaps the reprieve from the rain means that it’s time to get to work on purchase and rehab projects. As much as 80% of the loans that we do are loans to builders, developers, renovators, and quick-flip artists. We have creative funding for all types of projects.

As an example: we had a borrower approach us about obtaining the funds to purchase and rehab three little mill homes in a small town east of Salem. The real estate market in this town has fallen flat and so the borrower was able to tie these properties up for the amazing price of $32,500 each (mind you these are small but respectable little houses). Though his credit was rough (due to some bad breaks with the sale of a business venture), he had an excellent plan for rehabbing and marketing these properties to Salem residents looking for bedroom community tranquility. What’s more, the borrower was able to offer some additional collateral in the form of a second against a small commercial building that he owned and leased for a tidy profit.

We were able to loan him 100% of the purchase money, 100% of his rehab money, and 100% of the closing costs. The loan of $145,000 was closed in less than ten days (well before his purchase agreement expired), and the borrower–though paying a 5% commission and 15% interest–was not particularly concerned about these costs, as he was able to get in and out of the loan in just a few months time; and with no prepayment penalty, he turned a handsome profit on this venture.

These are the types of things that private money was made for.  When done right, private money is a win-win-win business (with a few extra wins thrown in on most transactions).

As a broker in a tough market, you should not only be looking for these types of transactions, but you should be going out and getting them.  Don’t sit and wait for the business to come to you, go get it!

If you need guidance on how to market private money loans to builders, developers, renovators, and quick-flip artists–give Fairfield Financial a call.  That is what we are about.  That is what we do.  And we can’t do it without you.

– Clay (clay@privatemoneysource.com, 503-476-2909)

Clay is Vice President of Fairfield Financial, a primary source for private money since 1964.  Fairfield is currently targeting loans in OR, WA, AK, CA, CO, ID, FL, GA, ID, MT, NV, NY, OK and TX.  To submit a loan to Fairfield for consideration: http://www.privatemoneysource.com/loanproposal.php

Top ten reasons to consider using a different source for your private money loan

February 8th, 2019

Clay Sparkman

I posted this years ago. Being Friday and all, I figured it would be nice to have a laugh. Enjoy!

I remember when I first came into this business 25 years ago, the general attitude toward private money–and private money lenders and brokers–was quite negative.  And to a certain extent, the reputation was not completely unearned.  It was an industry that seemed to harbor a small handful of crooks and a great many more just plain unprofessional “business people.”  And yet, what many people didn’t understand is that there were also a good many honest, professional individuals and entities offering a legitimate, useful, and important product.

As time went by, the rap on private money lenders improved significantly, and it almost got to the point where private money was considered to be kind of “sexy.”  (But that would be an exaggeration.) Everyone wanted to have a piece of that market.  Most of the players these days are honest, in my opinion, and many are highly professional, but still I think I’d like to have a go at those still in the market who are either dishonest or unprofessional or both.  Some private money lenders quite simply don’t belong in the business.  If not dishonest, they are paranoid and distrustful of every borrower that comes to them, and as such, they tend to go too far in trying to protect their investment.  This TOP TEN LIST is dedicated to those folks.  (They know who they are.)

Drum roll please…

Top ten clues that you should probably withdraw your loan request as fast as you can, and try elsewhere:

10. One number and two words:  $25,000 non-refundable deposit.

9. The investor insists on moving in with the borrower to “keep an eye on” his investment.

8. The investor insists on language in the loan agreement to the effect that: “… borrower will not eat junk food during the term of the loan, will not engage in bar fights, will not smoke certain substances, and will not jump out of airplanes or otherwise engage in so-called extreme sports.”

7. The lender requires a lien against borrower’s pet corgi, Noodles, as additional collateral to secure the loan.

6. Lender keeps referring to the subject property as “my property.”

5. Rates are by the day (uhhh … you know, like car title loans).

4. Lender keeps saying ka-ching at the end of every phone conversation.

3. The only product on offer involves a one week term with a 3-day extension option.

2. The investor wants to become a co-signer on the borrower’s checking account.

1. The investor requests a perpetual easement to ride his ATV on borrower’s property (and the borrower’s lot is only 4,000 square feet).

– Clay (clay@privatemoneysource.com, 503-476-2909)

Clay is Vice President of Fairfield Financial, a primary source for private money since 1964.  Currently targeting loans in Oregon and Washington, with potential to loan in:  AK, CA, CO, ID, FL, GA, ID, MT, NV, NY, OK and TX.  To submit a loan to Fairfield Financial for consideration: http://www.privatemoneysource.com/loanproposal.php

Real estate values – what’s next?

January 29th, 2019

S. Clay Sparkman

It has been quite a challenge this past dozen years predicting the movement of real estate market values. Values spike. values crash, values spike again, and then … maybe get a little squishy. Also, note the strange happenings in the national political machinery. It might be perilous to ignore this entirely.

For anyone who has been paying attention, I believe it would be hard to make a confident projection at this point.

In reading through some of the analysts and prognosticators, I felt that the following item by Caroline Feeney at Forbes did a nice job of identifying some of the factors and trends at work and codifying a reasonable scenario going forward.

Her column is at:

Real Estate Markets Cooling Across the Country, And It’s Not Just The Winter Effect

If anyone out there has any thoughts on this one way or another, please give us your thoughts.

Regards,

Clay Sparkman (503.476.2909, clay@privatemoneysource.com)

Rehab and construction loan FAQ (revised)

January 18th, 2019

Clay Sparkman

Here is an updated version of Fairfield’s Rehab and Construction Loan FAQ.

One of the most promising areas, at the moment, for real estate investors and brokers, by all indications, is REO, rehab, and quick flip of properties. The opportunity to buy distressed properties at a low price point is evident in many markets.  And yet it is difficult for most end-buyers (with a non-profit initiative) to take advantage of these opportunities, as they are not prepared to deal with the financing challenges or the rehab work involved when buying one of these properties. Thus comes a wonderful opportunity for those real estate investors who can size up a market effectively, move to buy challenged properties at below value prices, rehab them quickly, and get them back onto  the market at a slightly below market price.

Another point in favor of this brand of real estate buying/investing: Real estate investors who either (a) buy and sell quickly or (b) hold for the long haul are not as likely to get hurt by falling market values. It is those who are planning to hold a property for 1-5 years that are the most vulnerable.

And as we know, what is good for the borrower in this business is generally good for the lender, as well; these types of loans may be some of the best that private money lenders can expect to see for the next year or two and thus the easiest to get funded.

We tend to receive an endless parade of questions from lenders, brokers and borrowers as to how to best structure these types of loans, so here is an example (representative I think) of how one organization (Fairfield) goes about it.

REHAB AND CONSTRUCTION LOAN FAQ

What is your maximum LTV ratio for rehab and construction loans?

Well, it is important to talk about front-end and back-end LTV. Our maximum back-end LTV is 75% and our maximum front-end LTV is about the same (with a little more flexibility), though in the present market we try to keep that closer to 70%.

What do you mean by “back-end LTV”?

By back-end LTV, I mean the LTV at the completion of the project. For example: let’s say a borrower needs $100,000 for the acquisition of a property and $20,000 for construction funds and thus wishes to borrow $120,000. If the completion value of the property is conservatively figured at $185,000 based on comps provided by the borrower, the back-end LTV will be 120/185 or 65%.

Okay, so then what is “front-end” LTV?

Front-end LTV is the LTV immediately upon the closing of escrow but prior to any construction. In the example above, it is a little tricky to talk about the current value of the property since it is a fixer (and fixers are tough to comp directly), but if we determine that the AS IS value of the property is $135,000 then the front-end LTV is 100/135 or 74%. Generally, with rehab projects, if the back-end LTV is in-line, then the front-end LTV will be in-line also. This is because with rehab projects, the profit is made in the buy, not so much in the construction or the sale.

With construction loans, on the other hand, it is usually the other way around. The profit is made in the construction and generally not in the acquisition of the land. So, with construction loans, we need to work a little harder to make sure that the front-end LTV is in order.

Do you require an appraisal?

For rehab projects, rarely ever do we ask for an appraisal. We know that professional investors must move quickly and that they are frequently the best source for data regarding the projected value of their project. If an investor tells me that he expects to sell a property for $200,000 upon completion, I say, “Show me how you have come to this conclusion.” A good set of comps is frequently enough.

With construction projects, it is a little tougher sometimes to get a handle on the completed project, so on occasions, we will ask for an appraisal.

Are you able to loan 100% of hard costs?

Generally, not 100%. We like to see “a little skin in the game,” The amount of required down payment may be quite low. It all depends on the particulars of the borrower and the project. Our very strong repeat borrowers are sometimes able to leverage 100% and are not required to bring any money into the project. And borrowers with additional collateral, as well. It really depends on two factors: (1) How strong is the borrower? And (2) How well is he buying?

How does the construction money get disbursed?

From time to time, as a borrower completes the construction of a project, the borrower will submit a draw request to Fairfield Financial. Fairfield will review this request and, upon approval, release funds either directly to the subs/suppliers (if requested to do so) or to the borrower (if the borrower has already paid the subs/suppliers). Fairfield is responsible for ensuring that (a) the work is completed to an appropriate quality standard, (b) the project is on-budget (or if not on-budget, appropriate adjustments are made), and (c) that all subs and suppliers get paid for their work on the project. Borrowers are encouraged to make as many draw requests as they require, and if a request is complete and valid, we can generally disburse funds within 48 hours.

How much experience do you require from the borrower?

Well, it is nice to see a borrower come in with a little experience, but I have learned over the years that success in this business isn’t as much about experience as it is about common sense and the willingness and the ability to work tenaciously toward the completion of a project. So, if you don’t have experience but you can show me that you have the drive, the discipline, and the common sense, I’ll give you a chance.

What sort of credit and financial stability do you require from the borrower?

We don’t have specific underwriting guidelines. As far as credit, I am not looking for a perfect credit score (though we do have quite a few borrowers with credit scores in the 700s). I am looking at a pattern of payment over time. If a person has had a few bumps in the road or even a BK, for example, along the way, this doesn’t bother me. What concerns me is the borrower who has consistently shown a disregard for debt obligations over a period of time. I probably won’t want to get into a project relationship with this person.

Regarding financial strength (net worth and income), my primary concern is seeing that the borrower has either enough income (stated) or enough cash or liquid assets (stated) to get through the project (even if setbacks occur). That means showing the capacity to (a) make payments for the duration of the project (if an interest reserve account has not been set up) and (b) weather a few bumps in the road if the project doesn’t go exactly as planned. Beyond that, we don’t expect our borrowers to have any great wealth. We know that they are in the process of attempting to build something, and sometimes that starts from practically nothing.

What is the term of your loan and how are the payments handled?

The term of the loan is generally one year, though if a project is expected to require longer, we can make a loan for two years or more. Payments are made monthly and are interest-only. If there is enough equity in a project, we can arrange to have some number of payments held in reserve and applied to the loan for the initial period of the project.

What are your rates?

For this sort of thing, rates generally range from 11-14%. The rate is determined by (a) the LTV, (b) the strength of the borrower, (c) the amount of leverage involved, (d) the merits of the overall project, and (e) the perceived volatility of the local market.

Does the borrower pay interest on the full amount of the loan or only on the funds that have been disbursed?

The borrower must pay interest on the full amount of the loan for the duration of the loan. The funds are being held in trust by Fairfield Financial on behalf of the borrower. As such, the funds are not available to the lender throughout the duration of the loan and thus the lender has committed these funds and cannot utilize them in any way or earn interest.

What fees are involved?

We charge a loan fee equal to 5% of the gross amount of the loan (sometimes this can be less). We also charge a doc prep fee (generally $675) and an account-servicing setup fee which is based on the size of the loan and averages about $650. We also charge a property inspection fee, which is based on the size of the loan and the location of the property (typically $500 for local loans). There are no hidden junk fees.

Can the fees be paid from the proceeds of the loan?

Yes, if there is enough equity in the project. This is frequently the case.

Is there a pre-payment penalty?

There is no pre-payment penalty (except in rare cases.)

What happens if there is money left in the construction account upon completion of the project?

Excess funds will be credited to the borrower at the closing of escrow.

What is the approval process?

There are basically four steps.

  1. The borrower (or a representative for the borrower) runs the project concept by us. If we like the project concept and feel that the numbers are acceptable, we proceed to the next step.
  2. We review a complete loan packet. We ask that this be sent via overnight mail or via email as an Adobe Acrobat file attachment. The packet should include the following items:
    1. 1003 for each borrower/personal guarantor
    2. Credit (tri-merge) for each borrower/personal guarantor (or permission to pull credit)
    3. Company financials if the borrower is an entity (2 years)
    4. A privacy notice signed by the borrower
    5. A purchase agreement (when property acquisition is involved)
    6. A preliminary title report (if available)
    7. A detailed line-item budget for all construction work to be done on the project
    8. Plans (for all construction loans, and for rehab loans that involve changes in the basic floor plan)
    9. Borrower’s estimate of the completion value of the project, and comps (or other value analysis) to support this estimate
    10. Photos of the subject property
    11. Borrower credentials
    12. A copy of contractor license, bond, and insurance (for all construction loans)

13.  If all this checks out, we ask the borrower for a refundable deposit (generally somewhere between $500 and $2000). The deposit should be in the form of a cashier’s check or money order. We provide a conditional Loan Commitment Letter at this time.

14.  If the property checks out, we draw up the documents and close the loan through escrow.

Is the deposit refundable?

If we close the loan through escrow, the deposit is applied as a credit to the loan fees. If we don’t close the loan because (a) the borrower does not or cannot perform or (b) the project upon inspection is significantly different than as represented, we keep the deposit to reimburse us for our costs. Otherwise, if Fairfield fails to perform for any reason, we return the deposit to the borrower.

How long does it take to put the loan together?

We generally ask for a minimum of two weeks from the time we review a project packet until closing.

– Clay (clay@privatemoneysource.com, 503.476.2909)

Vice President of Fairfield Financial, lending since 1964.  Currently targeting loans in Oregon and Washington, with potential to loan in:  AK, CA, CO, ID, FL, GA, ID, MT, NV, NY, OK and TX.  To submit a loan to Fairfield Financial for consideration: http://www.privatemoneysource.com/loanproposal.php

Promotion: December new broker special

December 7th, 2018

S. Clay Sparkman

As December typically slows down, we often find ourselves torn between (a) just enjoying the holidays, and (b) keeping the business up and running at an acceptable level. (I’ve been through 24 holiday seasons with Fairfield, and it seems like it is always a challenge figuring out how to strategically approach December.)

This might help some of the brokers out there: We are going to offer a special this month that might help some of you get files off your desk which you don’t know what to do with, and hopefully make a client happy and get a nice payday as well.

Here is how it works:

(1) This promotion is only for brokers who have not closed a loan through us previously. We are interested in forming new relations that may be mutually beneficial for many years to come. (Currently, I would estimate that 70% of our borrowers/brokers are repeat clients or come to us via word of mouth.)

(2) We will only be charging 2.5 points on these promotional loans. As a broker, that gives you more room to make more money on the transaction. (This is the lowest point-price that we have ever offered.)

(3) You must register by simply sending an email to me at clay@privatemoneysource.com with the words “REGISTER DECEMBER PROMO” in the subject line.

(4) The loan must be submitted to Fairfield in December (but not necessarily closed in 2018).

(5) The minimum loan size for this promotion shall be $100,000.

That’s about it. Let me know if you have any questions.

All the best in your endeavors this holiday season, Clay

- Clay Sparkman (clay@privatemoneysource.com, 503-476-2909)

Using a private money option

November 26th, 2018

S. Clay Sparkman

Just about every broker should have a private money option to go to. Here are a few quick tips on how to get that going.

(1)   Find a Lending source that you like and trust. Also, make sure that they will work with you, guiding you through the process AND giving you quick feedback as to loans that you run by them on an ongoing basis.

(2)   Read through their loan specification guidelines and discuss these with them so that you have a decent idea of where private money might be a better option than a bank loan.

(3)   Find out what their sweet spots are. Ask them: Where do you bring options or value that a bank cannot?

(4)   If they want large non-refundable deposits up-front, I suggest that you don’t work with them.

(5)   Whenever a loan comes to you that doesn’t fit your ordinary lending criteria, think about private money. Would this scenario be a good fit?

(6)   If you feel like talking this out a bit with someone in the industry, give us a call. We are a small family business, started in Portland, Oregon in 1964. I myself have been at it for about 25 years, and I’m still learning new things every day.

All the best in your endeavors, Clay

- Clay Sparkman (clay@privatemoneysource.com, 503-476-2909)

Promotion: Quick flip loan special extended through end of 2018

November 7th, 2018

Clay Sparkman

Quick flips, rehabs, temporary acquisition loans, short sales, and bridge loans are among the many short-term loans that we most like to do.

Until now, we have made many such loans, and we have done so as follows: 5 points, 12-13% interest (on most loans), a one-year term, and with no prepayment penalties.

Lately we have had borrowers asking if we could offer a 6-month term with a lower up-front cost. The idea being that these folks could get in and out in six months or less—and thus save money on the cost of capital.

Well, we finally have an answer to that. We are presently offering the following program:

Six Month Quick Flip Loan

  • Available for quick flip loans (with or without renovation expenses involved) or any other short-term loans
  • 6-month term
  • 10-11% (depending on LTV and down-payment)
  • 2.5 points
  • The option to extend for additional months at a rate of a half-point per month may be offered. The decision as to whether or not to offer an extension is ultimately at the lender’s discretion. Reasonable progress on the construction work will be a consideration. The Borrower must be timely on first 5 payments (paid within the grace period), and not past the balloon date.
  • No prepayment penalty

We hope you like this program, and we predict that your clients will too. Let us know if we can take a look at a particular project for you.

– Clay (clay@privatemoneysource.com, 503-476-2909)

Clay is Vice President of Fairfield Financial, a primary source for private money since 1964.  Fairfield is currently targeting loans in OR, WA, AK, CA, CO, ID, FL, GA, ID, MT, NV, NY, OK and TX.  To submit a loan to Fairfield for consideration: http://www.privatemoneysource.com/loanproposal.php

Sample loan

October 23rd, 2018

Clay Sparkman

Here is an example of a loan that we recently placed. We like to give samples from time to time.  Not only does this give borrowers and brokers a better idea of the kinds of things that we do, but it also gives them a nice working format for presenting new loans.

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

Purchase and rehab of Single-family residence in xxxxxx, OR

Loan Details

  1. Loan Amount: $240,000
  2. Term: 1 year
  3. Interest Rate: 11%
  4. Monthly Payments: $2,200 Interest Only
  5. Security:  Deed of Trust in 1st Position security interest in real property located at xxxxxxxxxxxxxxxxxxxxxxxx
  6. Projected Value of property by Borrower’s estimate based on recent comps:  $360-$375,000
  7. Projected LTV by Borrower’s estimate based on recent comps: 64% – 67%

Loan Overview

xxxxxxxxxxxxxxxxxxxx are purchasing this property through their LLC, xxxxxxxxxxxxxx, LLC, and are requesting this loan for the purchase and rehab of the property.  xxxxxxx is an experienced realtor, and she and her husband xxxxxxx are experienced real estate investors.  xxxxxxx is a realtor that I’ve used personally, and I’ve referred her to several of our borrowers and lenders to sell their houses.  In addition, Fairfield has used xxxxxxx for valuations on a number of properties that were used as collateral for our loans. After the renovation, they intend to rent this house for $1,500/month. They will be putting approx. 43,000 down toward this purchase, and 30K will be held back for the renovations.

Eventually, they plan to build a 700sf ADU on site, and rent that out for an additional $1,500/month.  They intend to use their HELOC for the construction funds on the ADU; that would not be a part of this loan.  Ultimately, they plan to refi this property and hold it as a rental.  However, they are prepared to sell the property should they be unable to refi.

Property

The property has a 924sf home with a large shop on approx .1/3 acre.  It is a 2-bedroom, one-bathroom home, and photos of the property have been provided in the packet for your review. The listing can also be viewed here: xxxxxxxxxxxxxxxxxx. The listing can also be viewed in the packet as part of the comps that have been provided by the borrower.

A construction budget has also been provided in the packet.  xxxxxxx and xxxxxxx plan to do as much of this work as possible.  Xxxxxxxx is in the process of getting her General Contractor’s license, and plans to get that prior to building the ADU.  They have also included a resume of relevant experience.

Valuation

xxxxxxx has provided a CMA as well as a written Comp value Analysis explaining the logic used in her valuation. This has been provided in the packet for your review. Ultimately, they estimate the projected value of the property to be in the range of $360,000-$375,000

Income

A Commercial application has been provided by the borrower with both xxxxxxx and xxxxxxx’x financials, as they will be personally guaranteeing the loan.  They report a combined income of $190,899, and a net worth of $513,918.

Credit

The borrowers have also provided their own credit reports, which are included in the packet. xxxxxxx has a mid-credit score of 697, and xxxxxxx has a mid-credit score of 619.  These reports have been provided in the packet for your review.

Promotion: Best promotion we have offered in 54 years

June 5th, 2018

Clay Sparkman

It seems that quick flips are becoming quite common again, with the regular small-time investor. This is a favorite niche of ours. We particularly like to make these loans happen.

As you probably know, we work with a lot of people who are doing quick flip properties/projects. That means: buying low, generally fixing up (though not always), and then selling fast, at a fair price, for a nifty profit.

Until now, we have made many such loans, and we have done so as follows: 5 points, 12-13% interest (on most loans), a one-year term, and with no pre-payment penalties.

Lately we have had borrowers asking if we could offer a 6-month term with a lower up-front cost. The idea being that these folks could get in and out in six months or less—and thus save money on the cost of capital.

Well, we finally have an answer to that. We are presently offering the following program:

Six Month Quick Flip Loan

  • Available for quick flip loans (with or without renovation expenses involved) or any other short-term loans
  • 6-month term
  • 10-11% (depending on LTV and down-payment)
  • 2.5 points
  • The option to extend for additional months at a rate of a half-point per month may be offered. The decision as to whether or not to offer an extension is ultimately at the lender’s discretion. Reasonable progress on the construction work will be a consideration. The Borrower must be timely on first 5 payments (paid within the grace period), and not past the balloon date.
  • No prepayment penalty

We hope you like this program, and we predict that your clients will too. Let us know if we can take a look at a particular project for you.

– Clay (clay@privatemoneysource.com, 503-476-2909)

Clay is Vice President of Fairfield Financial, a primary source for private money since 1964.  Fairfield is currently targeting loans in OR, WA, AK, CA, CO, ID, FL, GA, ID, MT, NV, NY, OK and TX.  To submit a loan to Fairfield for consideration: http://www.privatemoneysource.com/loanproposal.php

Some interesting real estate and hard money loan articles

May 2nd, 2018

Clay Sparkman

As I go about my way, trying to make sense of real estate markets in various parts of the US and in the US in general AND trying to determine what that means for the private money loan business, I come across articles that I feel are probably share-worthy. In that spirit, I have linked to several articles here which you may find interesting and/or useful

7 Questions to Ask Hard Money Lenders

10 Things I Wish I Had Known Before I Bought a Foreclosure

Seattle-area home-price growth from current boom has surpassed last decade’s bubble

The most profitable ZIP codes in the Triangle for flipping houses

All the best in your endeavors,

- Clay (clay@privatemoneysource.com, 503-476-2909)

Clay is Vice President of Fairfield Financial, a primary source for private money since 1964.  Fairfield is currently targeting loans in OR, WA, AK, CA, CO, ID, FL, GA, ID, MT, NV, NY, OK and TX.  To submit a loan to Fairfield for consideration: http://www.privatemoneysource.com/loanproposal.php

Greatest Promo Offer by Fairfield – Private Money Loans

December 6th, 2017

Clay Sparkman

We at Fairfield would like to run a special loan program to give this holiday season (and the sluggish period typically coming out of it) a kick in the butt. Hey, we can celebrate with our families and friends, and still get a few things setup and ready to go in 2018, right?

Here is how it will work: Starting immediately, we are offering a significant cut in our private money loan rates. Our regular charge for a 12-month bridge, construction or rehab loan (with no prepayment penalty) is generally 4 points and 11%–with the rate dependent on the particulars of the loan.

For the months of December (2017), and January and February (2018), we are offering (via brokers and other third-parties, and directly to borrowers as well) 12-month private money loans (with no prepayment penalty) priced at 4 points and 11%, and with no additional fees (we ordinarily charge three separate loan prep and processing related fees). We will also be giving a one-point rebate fee to the broker or third-party arranging the loan, or to the borrower (if the loan is arranged directly via the borrower). (Also note: Longer terms may be arranged but must be negotiated and will most likely be somewhat more expensive.)

Thus (and this is the best that we have ever offered): the effective rate for these loans will be 3 points and 11% for one year, with no additional fees or prepayment penalties.

The conditions are as follows of this promotion are as follows

(1)   You must register with FFS by sending an e-mail to clay@privatemoneysource.com with “REGISTER PROMO2018” in the subject line and your name, company name, and phone number in the body of the e-mail, no later than 1/15/18.

(2)   You must submit a summary of your loan no later than 1/31/18, and FFS must approve the summary.

(3)   You must submit a complete loan packet, as required by FFS, no later than 2/28/18.

(5)   The loan must close no later than 3/31/18.

Check out our web site for details re our loan criteria, our packaging guidelines, and our process.

www.privatemoneysource.com

I encourage you to sign up and give it a try. The real estate market is up and rising, and we are just now entering the construction season of 2017–one that I expect to be the best we have had in quite some time.

All the best in your endeavors, Clay

- Clay (clay@privatemoneysource.com, 503-476-2909)

Clay is Vice President of Fairfield Financial, a primary source for private money since 1964.  Fairfield is currently targeting loans in OR, WA, AK, CA, CO, ID, FL, GA, ID, MT, NV, NY, OK and TX.  To submit a loan to Fairfield for consideration: http://www.privatemoneysource.com/loanproposal.php

House flipping wisdom worth noting

August 16th, 2017

Clay Sparkman

I try to keep an eye out for good information on the status of property flipping. Here are a few things that I have come across recently.

With regard to the best cities for home flipping (as of May):

The 25 Best Cities for Flipping a House

Taylor Tepper at Money

May 25, 2017

http://time.com/money/4784913/house-flipping-best-25-cities/

Another article of a similar ilk (quite recent).

Richie Bernardo, Senior Writer at WalletHub

2017’s Best Places to Flip a House

August 1, 2017

https://wallethub.com/edu/best-cities-to-flip-houses/23158/

This is a good article from 2016. The ideas are still applicable.

House Flipping in 2017: 5 Tips to Help You Turn a Profit

Nathan Pyles at House Flip Mentor

September 12, 2016

http://www.houseflipmentor.com/house-flipping-tips-for-2017/

And here’s some good information.

Home-Flipping Profits Just Hit An All Time High: These 10 States Offer The Highest Return Potential

by Tyler Durden at Zero Hedge

Mar 17, 2017

http://www.zerohedge.com/news/2017-03-17/home-flipping-profits-just-hit-all-time-high-these-10-states-offer-highest-return-po

Let me know if you have any other indicators that you use. We would like to hear about them.

- Clay (clay@privatemoneysource.com, 503-476-2909)

Clay is Vice President of Fairfield Financial, a primary source for private money since 1964.  Fairfield is currently targeting loans in OR, WA, AK, CA, CO, ID, FL, GA, ID, MT, NV, NY, OK and TX.  To submit a loan to Fairfield for consideration: http://www.privatemoneysource.com/loanproposal.php

Five potentially useful indicators of the likely movement of value

August 9th, 2017

Clay Sparkman

Any good real estate investor should be attempting  to assess whether property values are rising, falling,  or holding in the area of his/her latest potential investment. After all, the core question when buying investment property (particularly short-term) is, “what is value likely to do in the next year or so?” If you sense that values are likely to fall in a certain investment region, you had better take that into account when deciding whether or not to invest, and for how long. And if you decide to invest, given this information (whatever it may lead you to believe), you will be able to better assess your investment risk, potentially reward, and appropriate strategy.

The direction of property values is not an easy thing to predict, but if one really wants to inform themselves with regard to what property values might be doing in the near future, than there are three pretty good things to look at.

But first, what not to count on: If you are looking at whether or not property values are rising, falling or holding today, just remember that this is a trailing indicator. At best it will tell you what is happening now, and even worse, it may be a better indicator of what happened several months ago. Look at this info, but don’t take it very seriously as an indicator of what is going to happen next.

And so, here are five leading indicators that I would recommend you consider:

(1) The rural test: Ask  yourself what property values are doing in rural (or more remote) areas. Those values tend to lead the values of properties in more concentrated areas. So, if you are suddenly witnessing a notable fall in values in rural areas, chances are that other values in the region will follow.

(2) The time-on-market test: Determine what the average time on market is as you assess potential opportunities . For residential properties 3-6 months is fairly normal, and would tend to indicate that values will be holding for awhile. Last time I checked in Portland, the average time on market for residential properties was 1.7. This is a very low number and a very good indicator that values are on the rise.

(3) Look at the ratio of replacement cost to purchase price. If the ratio of replacement cost to purchase price is high, then property values are likely to rise, at least for the near-term future.

(4) Look at the growth rate of a particular area. Portland, Oregon–where we are located–has become a very desirable destination over time, so the growth rate in Oregon just due to people relocating to the state, continued to push prices up for several years after prices in most other states had leveled up. This could have been predicted by looking at a growth-rate curve.

(5) The wild card. This is not a predictor, so much as a red flag. The political situation is such in the USA at this moment in time, that most large markets are weary (stock market, real estate markets, etc). So far, the new administration has seemingly been good for these markets (or certainly not bad), but we may have crossed a line to the point where uncertainty is going to become more and more of a factor in market pricing. so, take this as a general note: Pay attention to what is happening politically, as it may have adverse consequences for economic markets (or even positive consequences in certain markets). As always, we encourage you to keep your investment resources highly diversified, and keep a close eye on the news.

Let me know if you have any other indicators that you use. We would like to hear about them.

- Clay (clay@privatemoneysource.com, 503-476-2909)

Clay is Vice President of Fairfield Financial, a primary source for private money since 1964.  Fairfield is currently targeting loans in OR, WA, AK, CA, CO, ID, FL, GA, ID, MT, NV, NY, OK and TX.  To submit a loan to Fairfield for consideration: http://www.privatemoneysource.com/loanproposal.php

Construction Loan Proposal

July 26th, 2017

Clay Sparkman

We have run this construction loan program on several occasions, and we are so excited about this specific niche that we are going to run a similar promotion in honor and celebration of summer.

As a private money construction lender, we’re able to provide a variety of creative solutions that are just not available via more conventional sources. If the parameters and circumstances are right, we are also able to overlook many issues that might be problematic with more structured lenders. Small to medium construction loans are one of our sweet spots, and we are geared up to make as many as we can this construction season.

Starting immediately, we are offering a significant cut in our construction loan rates. Our regular charge for a 12-month construction loan is 5 points and 10-12%–the rate dependent on the particulars of the loan—but typically 11%.

For the month of July/August/September, we are offering (via brokers and direct to borrowers) 12-month construction loans–for ground up construction priced at 3 points and 10-12% (typically 11% depending on the particulars).

The conditions are as follows of this promotion are as follows

(1)   You must register with FFS by sending an e-mail to clay@privatemoneysource.com with “REGISTER” in the subject line and your name, company name, and phone number in the body of the e-mail, no later than 8/31/17.

(2)   You must submit a summary of your loan no later than 9/7/17, and FFS must approve the summary.

(3)   You must submit a complete loan packet, as required by FFS, no later than 9/15/17, for the loan the same loan for which you submitted a summary in July or August.

(4)   The minimum loan size for this promotion is $200,000.

(5)   The loan must close no later than 9/30/17.

Check out our web site for details re our loan criteria, our packaging guidelines, and our process.

www.privatemoneysource.com

I encourage you to sign up and give it a try. The real estate market is up and rising, and we are just now entering the construction season of 2017–one that I expect to be the best we have had in quite some time.

All the best in your endeavors, Clay

– Clay Sparkman (clay@privatemoneysource.com)

Vice President of Fairfield Financial, lending since 1964.  Currently targeting loans in Oregon and Washington, with potential to loan in:  AK, CA, CO, ID, FL, GA, ID, MT, NV, NY, OK and TX.  To submit a loan to Fairfield Financial for consideration: http://www.privatemoneysource.com/loanproposal.php

Sample loan in Oregon

April 25th, 2017

Clay Sparkman

Here is an example of a loan that we recently placed. We like to give samples from time to time. Not only does this give borrowers and brokers a better idea of the kinds of things that we do, but it also gives them a nice working template for presenting a loan.

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

Cash out Refi on SFR in Mulino, OR

Loan Details

  1. Loan Amount: $150,000
  2. Term: 12 Months
  3. Interest Rate: 10%
  4. Monthly Payments: $1,375.00 Interest Only on 15152 Union Mills, Mulino, OR 97042
  5. 3 Month minimum interest guarantee
  6. Security:  Deed of Trust in 1st Position security interest on 15151
  7. Current value by Borrower’s opinion based on CMA: $567,390
  8. Projected LTV by Borrower’s opinion based on CMA: 26%

Loan Overview

xxx bought the subject property lot for $65,000 with cash out of pocket, and built a spec house with an approximate cost of $350,000, all with his own cash.

Currently, xxx is under contract to purchase another house that he intends to rehab and sell.  The cost of that house (which will not be collateral on this loan) is $165,000, which xxx is able to cover, but he would have no funds remaining to rehab the house.  The purpose of this loan is to provide cash to the borrower so that he will have the funds to renovate that house.

Property

The subject property is 3,300 square feet (the borrower reported 3,300 but the CMA reports 3,000 which was an estimate when the report was done 6 months ago) and sits on .95 acres.  There are 4 bedrooms and 3 bathrooms.  Currently, The property is approximately 95% complete, needing only the final electrical and Plumbing inspection before he can get a certificate of occupancy.  A few photos have been provided by the borrower, but we will be doing a property inspection to take a more comprehensive set.  Those photos will be provided after the inspection (early next week).

Valuation

The borrower’s realtor has provided a CMA for a suggested list price $567,390 based on a $/SF of $189/SF.  However, this shows a square footage of 3,000 and the borrower reports that it’s actually around 3,300.  The borrower believes that the home should sell for approx. $600,000, but for the purposes of this report we’ll go with the lower realtor estimate.  The CMA has been provided in the packet for your review.

Income

A 1003 has been provided by the borrower.  xxx owns XYZ Coin and Jewelry, and takes a monthly draw of $1,800 and $12,000 each quarter from another company that he owns.  He reports having no debt, and approximately 1,150,000 in real estate.

Credit

xxx has a mid-credit score of 727.  Aside from a credit card with a $252 balance, xxx has no debt or any history of a loan.  He did tell me that this is the 1st loan he’s ever gotten in his life.

Check out our web site for details re our loan criteria, our packaging guidelines, and our process.

www.privatemoneysource.com

I encourage you to sign up and give it a try. The real estate market is up and rising, and we are just now entering the construction season of 2017–one that I expect to be the best we have had in quite some time.

All the best in your endeavors, Clay

– Clay (clay@privatemoneysource.com)

Vice President of Fairfield Financial, lending since 1964.  Currently targeting loans in Oregon and Washington, with potential to loan in:  AK, CA, CO, ID, FL, GA, ID, MT, NV, NY, OK and TX.  To submit a loan to Fairfield Financial for consideration: http://www.privatemoneysource.com/loanproposal.php

Consturction loan promotion

January 10th, 2017

Clay Sparkman

We have run this construction loan program on several occasions, and we are so excited about this specific niche that we are going to run a similar promotion to get the year off to a good start for all of us. After all, at least in the more moderate climates, now is the time to get going!

As a private money construction lender, we’re able to provide a variety of creative solutions that are just not available via more conventional sources. If the parameters and circumstances are right, we are also able to overlook many issues that might be problematic with more structured lenders. Small to medium construction loans are one of our sweet spots, and we are geared up to make as many as we can this construction season.

Starting immediately, we are offering a significant cut in our construction loan rates. Our regular charge for a 12-month construction loan is 5 points and 10-12%–the rate dependent on the particulars of the loan—but typically 11%.

For the month of January/February/March, we are offering (via brokers and direct to borrowers) 12-month construction loans–for ground up construction priced at 3 points and 10-12% (typically 11% depending on the particulars).

The conditions are as follows of this promotion are as follows

(1)   You must register with FFS by sending an e-mail to clay@privatemoneysource.com with “REGISTER” in the subject line and your name, company name, and phone number in the body of the e-mail, no later than 1/31/17.

(2)   You must submit a summary of your loan no later than 2/7/17, and FFS must approve the summary.

(3)   You must submit a complete loan packet, as required by FFS, no later than 2/28/17, for the loan the same loan for which you submitted a summary in January or February.

(4)   The minimum loan size for this promotion is $200,000.

(5)   The loan must close no later than 3/31/17.

Check out our web site for details re our loan criteria, our packaging guidelines, and our process.

www.privatemoneysource.com

I encourage you to sign up and give it a try. The real estate market is up and rising, and we are just now entering the construction season of 2017–one that I expect to be the best we have had in quite some time.

All the best in your endeavors, Clay

– Clay (clay@privatemoneysource.com)

Vice President of Fairfield Financial, lending since 1964.  Currently targeting loans in Oregon and Washington, with potential to loan in:  AK, CA, CO, ID, FL, GA, ID, MT, NV, NY, OK and TX.  To submit a loan to Fairfield Financial for consideration: http://www.privatemoneysource.com/loanproposal.php

Article: The search for a better loan

January 4th, 2017

Clay Sparkman

This article, The Search for a Better Loan, published in Scotsman Guide, should be useful to most Brokers trying to juggle the needs and interests of investment property borrowers.

Scotsman Guide is an excellent resource available online, with good articles and excellent information regarding different types of commercial money sources and particulars regarding each of those sources. I highly recommend it to both Commercial Brokers and Borrowers.

– Clay (clay@privatemoneysource.com)

Vice President of Fairfield Financial, lending since 1964.  Currently targeting loans in Oregon and Washington, with potential to loan in:  AK, CA, CO, ID, FL, GA, ID, MT, NV, NY, OK and TX.  To submit a loan to Fairfield Financial for consideration: http://www.privatemoneysource.com/loanproposal.php

How to Make Offers That (Nearly) Guarantee You Can’t Lose

December 28th, 2016

Clay Sparkman

I recently came across this article,  How to Make Offers That (Nearly) Guarantee You Can’t Lose by Sterling White, and felt that it would be worth sharing on this blog. I can’t tell you haw may times I have had investor-Borrowers come to me looking for a private money loan and when I asked them how they had determined the appropriate value for the property, they were hard pressed to give me a reasonable answer. Real estate investing, renovation, and flipping is a risky business and it requires a great deal of time and effort. A property investor should never make an offer without doing his/her homework first. They may be eager to just get a project going, but it is not worth it to take the chance of going into a projected that is doomed from the start. (It reminds me of the title of the book by Robert Fulghum: It was on Fire When I Lay Down on it.) Don’t lay down on a bed that is already on fire. Give yourself every chance to succeed.

At FFS, we offer private money loans for projects of this sort, and as an added bonus, you’ll get some nearly 100 years of experience analyzing your project and what we deem to be its chances of succeeding.

Best, Clay

– Clay (clay@privatemoneysource.com, 503-476-2909)

Clay is Vice President of Fairfield Financial, a primary source for private money since 1964.  Fairfield is currently targeting loans in OR, WA, AK, CA, CO, ID, FL, GA, ID, MT, NV, NY, OK and TX.  To submit a loan to Fairfield for consideration: http://www.privatemoneysource.com/loanproposal.php

Ask an Investor

December 21st, 2016

Clay Sparkman

I came across the following blog posting by Jersey Digs, and felt that it would be worth passing along to interested borrowers and brokers:

Ask an Investor: How did you get started? How do you make money?

I hope you found that to be useful. Any feedback would be much appreciated.

If you would like to discuss private money loans further or run a particular scenario by us, contact Clay via e-mail at clay@privatemoneysource.com. Otherwise, if you would like to get a better feel for our company and the types of programs we do, please browse our web site at http://www.privatemoneysource.com.

Best, Clay

– Clay (clay@privatemoneysource.com, 503-476-2909)

Clay is Vice President of Fairfield Financial, a primary source for private money since 1964.  Fairfield is currently targeting loans in OR, WA, AK, CA, CO, ID, FL, GA, ID, MT, NV, NY, OK and TX.  To submit a loan to Fairfield for consideration: http://www.privatemoneysource.com/loanproposal.php