Upscale Los Gatos Rehab – Phase I
This is a prefunded purchase & rehab opportunity for a Single Family Residential property in California. The subject property address is 138 Wood Road, Los Gatos, California.
The developer is requesting a loan of $2,668,000 in order to renovate and purchase the underlying property. The property was purchased for a total of $2,695,000 in October of 2015. There is major renovation needed for the underlying property, totaling $640,000. The borrower will receive 5 draw(s) totaling $2,668,000 over the course of the loan. The initial draw in the amount of $2,028,000 occurs at close of escrow to purchase the property. The second draw of $160,000 will be disbursed toward a quarter of line items 1-8 and after line items 9-37 are complete. The third draw of $160,000 will be disbursed toward a quarter of line items 1-8 and after line items 38-44 are complete. The fourth draw of $160,000 will be disbursed toward a quarter of line items 1-8 and after line items 45-50 are complete. The fifth draw of $160,000 will be disbursed toward a quarter of line items 1-8 and after line items 51-64 are complete and evidence of completion of the renovation is shown. $97,827 (approx. 4 months) in interest reserve will be held by Patch of Land. The borrower plans to sell in one year or less. The borrower has an option to exercise a six month extension, with an additional 0.5 percent to investors.
138 Wood Road is comprised of two separate legal parcels. The main parcel is comprised of approximately 4.32 acres and includes the 2,711 sq. ft. residence and pool. The second parcel is approximately 0.63 acres and consists of land only. The project includes converting the existing 2 parcels into separately buildable lots of approximately 2.5 acres each through a lot line adjustment. The existing residence on the main parcel will be completely remodeled and expanded by approximately 800 sq. ft. The second parcel will be prepared for sale as a package with appropriate approvals and potential plans for construction of a 3,500 sq. ft. home. Borrower states that all these steps have been verified as feasible with extensive in-depth consultations with the Los Gatos City Planning department, architects, survey and report engineers, and contractors.
Please note that the ARV of 45% for this project is based upon the lot line adjustment, approved entitlements, and the sale of the two parcels separately as planned. If the developer is not able to proceed with a lot line adjustment, the backup plan is to proceed with development of the home and market the property as a residence with a larger combined lot at a higher price. This would result in an ARV of 71% based on the appraisal value of this contingency plan.
The initial investment needed for this property is in the amount of $2,028,000 to purchase the property. The combined renovation draws for this project will be raised at a later time as they are requested.
138 Wood Road
- Purchase Price: $2,695,000
- Renovation: $640,000
- After-Rehab Value: $5,923,000
An independent third party appraisal commissioned by Patch of Land, shows an After Repair Value (ARV) of $5,923,000 for 138 Wood Road. This includes the ARV for the two separate lots. The ARV ratio is 45.04% 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 Los Gatos is stable supply demand balance.
138 Wood Road was built in 1971, located in the suburban neighborhood of Los Gatos, California. The property has 8 rooms including 4 bedrooms and 4 bathrooms, with a gross living area of 2,711 sq. ft. on a 194,277 sq. ft. lot. The property will be increased to 3,500 sq. ft. after renovations. The property is near El Sereno Preserve, wineries, public parks, shopping and recreation.
138 Wood Road
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:
- New Windows
- New Doors
- New Heating/Air Conditioning
- New Tile
- New Wood Flooring
- New Plumbing
- New Decks
- New Kitchen
- New Bathrooms
- Landscaping Makeover
- Approximately 800 square feet of added livable space
- Adjusted Lot Line of 2nd Parcel with Full Entitlements