The beauty of private money loans – when they're right, they're right

Wednesday, August 28th, 2013 at 10:48 am

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.)
The borrower had all kinds of problems, but this loan was a gold nugget to us. Why? Just look at the LTV.

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)
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