This is a prefunded opportunity for a Single Family Residential property in California. The subject property address is 610 Estrella Avenue, Arcadia, California.
The developer is requesting a loan of $1,890,000 in order to purchase and renovate the underlying property. The property was purchased for a cumulative total of $1,750,000 in April of 2015. There is major renovation needed for the underlying property, totaling $350,000. The borrower will receive 5 draw(s) totaling $1,793,925 over the course of the loan. The initial draw in the amount of $1,443,925 occurs when the loan closes. The second draw of $100,000 will be disbursed when demolition and clean up is complete. The third draw of $100,000 will be disbursed when rough plumbing and electrical is complete. The fourth draw of $100,000 will be disbursed when sheet rock and plaster is complete. The fifth draw of $50,000 will be disbursed when renovation is complete and the lender obtains the certificate of occupancy. $34,650 (2 months) in interest reserve will be held by Patch of Land. The borrower plans to sell within 6 months.
610 Estrella Avenue
An independent third party appraisal shows an After Repair Value (ARV) of $3,300,000 for 610 Estrella Avenue. The collective ARV ratio is 57.27% and is in line with the data we found during our due diligence process. Our research shows the residential market surrounding the underlying property in this area of Arcadia is stable and supply and demand are in balance.
Investment Needed | Minimum Investment | Loan Duration | APR |
$1,890,000 | $5,000 | 12 months | 11% |
Combined Appraised ARV | 57% Loan to Combined Appraised ARV | $3,300,000 |
Combined Zillow As-Is Value | 86% Loan to Combined Zillow As-Is | $2,197,428 |
Combined Homesnap As-Is Value | 104% Loan to Combined Homesnap As-Is | $1,820,100 |
Combined Trulia As-Is Value | 86% Loan to Combined Trulia As-Is | $2,193,000 |
610 Estrella Avenue
Property renovations are awaiting loan to start renovation and there is major renovation needed for the property. The following renovations are planned to be completed:
Covered Wagon Investments, Inc. has 3 managing members with a combined 60+ years in the real estate industry. Their knowledge of the business consists of direct experience in brokerage, lending, investing and managing both residential and commercial property. 2 of the managing partners co-founded a well-known brokerage firm based out of South Pasadena that boasts nearly a half billion dollars in sales since its inception in 2010. Between the 3 of them, the partners have rehabbed 7 properties in the last 3 years focusing primarily on the Greater Los Angeles Area and San Gabriel Valley.
The below financial estimates are based on Patch of Land’s investment of $1,890,000 to the developer that will hold title to 610 Estrella Avenue, Arcadia, California
The developer is contributing $325,075 in a combination of downpayment, any pre-existing contributions, and payment of closing costs. Patch of Land is contributing a $1,890,000 loan to purchase, renovate, and cover any additional closing costs for a total capitalization of $1,890,000. The amount will be issued to the borrower in 5 disbursement(s).
Purchase Price | $1,750,000 |
Renovation Costs | $350,000 |
Origination and Processing Fees | $61,425 |
Interest Reserve | $34,650 |
Closing Costs | $19,000 |
Developer Contribution | -$325,075 |
Total Costs | $1,890,000 |
Combined Appraised ARV | 57% Loan to Combined Appraised ARV | $3,300,000 |
Combined Zillow As-Is Value | 86% Loan to Combined Zillow As-Is | $2,197,428 |
Combined Homesnap As-Is Value | 104% Loan to Combined Homesnap As-Is | $1,820,100 |
Combined Trulia As-Is Value | 86% Loan to Combined Trulia As-Is | $2,193,000 |
Interest will begin to accrue at the date each investors funds clear escrow.
Distributions of Interest only will be paid Monthly as loan payments from the Developer are processed. Borrower will pay Interest only payments in the amount of approximately $17,325 to Patch of Land which will in turn be distributed to you as an Investor Monthly at your fractional investment amount.
Total repayment of capital is expected on or before the end of April 2016. Distributions will be made directly into each investors Patch of Land accounts online.
Developer
Covered Wagon Investments, Inc. has 3 managing members with a combined 60+ years in the real estate industry. Their knowledge of the business consists of direct experience in brokerage, lending, investing and managing both residential and commercial property. 2 of the managing partners co-founded a well-known brokerage firm based out of South Pasadena that boasts nearly a half billion dollars in sales since its inception in 2010. Between the 3 of them, the partners have rehabbed 7 properties in the last 3 years focusing primarily on the Greater Los Angeles Area and San Gabriel Valley.
Monitoring the risk factors in your portfolio is an important part of the due diligence process. As such, Patch of Land has created a proprietary risk profile for your review. In keeping with our policy of absolute transparency, we’re showing you the same risks, mitigants, and high level risk factors that play into our decision-making process.
This information is obtained from sources which we, and our suppliers, believe reliable, but we do not warrant or guarantee the accuracy of this information. To the maximum extent permitted by law, we and our suppliers disclaim any and all liability in the event any information proves to be inaccurate, incomplete or unreliable, or result in any investment or other losses.
Risk Subject | Low / Medium / High | |
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Loan to Value (ARV) | 57.27% | |
Local Market | Strong: Under 3 months market time | |
Borrower Track Record | Successful resale portfolio of multiple properties All 3 guarantors are licensed real estate brokers Two members of the corporation have personal tax liens |
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Borrower Contribution | $325,075 |
Risks | Mitigants |
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1. The market falls enough to remove a profit motive for the developer | 1. Arcadia, CA has shown stable growth over the past year, has a market time of under 3 months and home values are projected to increase over the next 12 months. |
2. The property is being purchased below market value.2. Developer does not complete the project1. The developer has already contributed $325,075 to the project. The loan is funded at a collective 57.27% ARV. This allows for a reasonable expectation of recovery of capital in a liquidation scenario.
2. The underlying note issued by Lender is secured by 3 personal guaranties from experienced real estate professionals.3. Borrower personal tax liens1. The personal tax liens cannot be applied to this property as it is corporation owned.