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

Home rehab season is here

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


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.
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.

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.
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.
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.

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