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We have robust quality controls with detailed checklists and a review of third-party reports.
Francis Lam
The borrower for this loan is Francis Lam. Francis has conducted various fix and flip transactions in the California market and is the principal of Top Group Real Estate LLC. Top Group Real Estate LLC has been investing in real estate since 2008 and is currently an active LLC in good standing in the state of California.
Francis Lam intends to renovate the property and put the property back on the market for re-sale to an end home owner within 12 months.
At A Glance
| Property Type: | Residential, Single-Family |
| Investment Type: | Loan Purchase* |
| Estimated Return: | 8% annualized |
| Loan Term: | 12 months |
| Location: | Anaheim, CA |
| Purchase Price: | $295,000 |
| Loan Amount: | $236,000 |
| Current Appraised Value: | $385,000 |
| Current Loan to Value: | 61% |
| Loan to Purchase Price: | 80% |
Summary
The borrower, Francis Lam, is obtaining a loan for the purpose of a rehab. Mr. Lam is performing renovations on the property and will look to sell as quickly as possible at a higher price than the purchase price. Renovations typically include new paint, new carpet, system, plumbing and electrical upgrades, and general clean up items. Upon completion, the property will look like other renovations Mr. Lam has executed.
Investors will receive interest payments of 8% with a final balloon payment at the end of the loan term. The security interest for the underlying borrower loan is a deed of trust secured by the property in first position.*
There is a 6 month prepayment penalty associated with the loan. Any proceeds received from the prepayment penalty will be paid to the investors. For details on the prepayment penalty see the attached Series Note Listing.
Because the total loan amount is $236,000 and Realty Mogul is raising $235,000 from investors, Realty Mogul Co. will be investing $1,000 of company proceeds and assuming a $1,000 interest as an investor in this loan.
Risk Mitigation**
- There is a personal guarantee on the underlying borrower loan.*
- The borrower is a real estate investor with a history and a track record of success.
- The security interest for the underlying borrower loan is a deed of trust.*
- The underlying borrower loan is protected by title insurance.*
- The underlying property is protected by hazard insurance.*
- Investor returns are not contingent on the appreciation of the property value and investor returns do not increase based on any resale price. The borrower is still obligated to repay the corresponding borrower loan.
- In a worst case scenario, a foreclosure of the property is possible. Proceeds would be distributed to investors according to the percentage of the total investment opportunity initially funded net of any expenses incurred for the foreclosure proceedings.
*An investment in this loan will be made through a borrower dependent payment note issued by Realty Mogul. This promissory note is dependent on payments that Realty Mogul receives on the underlying borrower loan. While the underlying borrower loan is secured by legal title on real estate, the borrower dependent payment note is not itself secured nor does it have a personal guarantee.
**The above is not intended to be a full discussion of all the risks of this investment. Please see the Risk Factors in the Investor Document Package for a discussion of additional risks.
The City of Anaheim is located within Orange County in Southern California, roughly 25 miles from downtown Los Angeles. The City of Anaheim has an estimated population of 335,000 residents and supports a thriving business community with companies such as Disneyland Resort, Carl Karcher Enterprises, INc., L-3 Communications and Pacific Sunwear and a County unemployment rate of 5.7%. Anaheim is also home to several successful sports franchises including the Anaheim Ducks and Los Angeles Angels of Anaheim. Annually, Anaheim welcomes millions of visitors to the city, many of which come to the Anaheim Convention Center, which is the largest on the west coast.
Anaheim has 74 public schools and several nearby Colleges and Universities including California State University of Fullerton, Chapman University and University of California Irvine. Per the 2010 Census the median home price in Anaheim was $333,000.
The property is located in a suburban neighborhood in Anaheim comprised primarily of single family homes. It is in relatively poor condition relative to other homes nearby that are of similar age and size, providing for a potentially significant value add opportunity through repairs and cosmetic upgrades. Several of the nearby properties have recently sold at an average price of $400,000 in the past 6 months. The property location is particularly appealing due to it being walking distrance to several schools (elementary, junior high and high school) and several public parks. The property is also located only 3 miles from Disneyland and the Interstate 5 Freeway.
