Friday, January 28, 2011

Another Hard Money Loan Started

Hard money loan #16 kicked off a few days ago. This is a loan on a property bought at foreclosure auction in Antioch, California, which is east and a tiny bit north of San Francisco. The borrowers are two people who have borrowed from us before. They purchased the property for $220,000. (The bank took a $400,000 loss on this one - ouch!) Our loan, secured by a first mortgage, is for $162,000, giving a LTV ratio of 73%. The borrower tells us he already has a buyer in line for the property at $270,000. (Until we're in escrow, I wouldn't hold my breath. Deals fall apart all the time.) My partner figures it's worth between $270,000 and $280,000. This seemed like it was a fairly hot property at the auction - there were a total of 8 parties bidding on it. The property is a two story single family home of about 2,300 square feet. It was built in 2000 and has 4 bedrooms and 2 baths. A nearby comp is currently in escrow for around $255,000 and it sold quickly at that price with multiple offers. And it still needed paint and carpet and is a slightly inferior model.


Standard loan deal - 1 year, interest only payments, 9% net to investors.

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