I’m fishing for a hard money loan along the following lines and I wonder if anyone here would care to point out anything unrealistic in my request.
I’m looking for private/hard money for rehab of up to 40 properties (all in Tucson Arizona area) that may include single-family homes, duplexes and 4-plexes.
This is a trust liquidation portfolio buy-out. I’m getting a deep discount wholesale price (50% of market value) on the package due to sellers need to sell all together in one chunk. Sellers are doing a 1031 exchange into a large TIC and want to streamline things. Portfolio has been neglected some due to poor health of deceased former owner and rehab is needed.
Portfolio comes in at $8 million (100% market value)
My purchase price will be $4 million (50% m.v.)
My loan amount will be $5.2 million (65% m.v.)
Difference of $1.2 million held by lender to pay…
$4k - loan fees (approx)
$156k - 3 points
$1,040k - (20%) 2 years interest pre-payment at 10%apr
Loan due in full in 2 years.
Early release provisions on individual properties so they can be individually retailed out at any time with no early payoff penalties. I may feed pieces to other rehabbers and perhaps a ready-made loan can be prepared to piece this out. Thus, additional loans can be spawned from this one and increase lenders gains.
If not pieced out to other rehabbers first, the properties will get retailed and/or rented out as quickly as the rehab work is completed.
The loan will be repaid by either selling the properties outright (with proceeds of sale, minus rehab expenses) going to pay off the lien or by getting long-term conventional financing and retaining the properties as rental income generators.
I’ll probably sell off all the single-family homes and retain multi-unit properties as rentals and have them managed by a local management company.
If needed or if it gets me a lower interest rate I can put some of my free and clear land (86 development acres just south of Prescott with year-round creek and lots of pines) as additional collateral. I would put cash into the deal but I want to use those funds for the rehab efforts.
Thanks for all who respone!
Jason Wharton
