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Borrower for 3435 Adina Drive
There are 3 borrowers for this loan. The borrowers have credit scores of over 730, 710, and 570 and have completed 10 projects with a similar business plan in the past.
At A Glance
| Property Type: | Residential, Single-Family |
| Investment Type: | Loan Purchase |
| Estimated Return: | 10.0% annualized |
| Loan Term: | 12 months |
| Location: | Los Angeles, CA |
| Purchase Price: | $745,000 |
| Rehab Budget (1): | $185,000 |
| Total Project Cost: | $930,000 |
| Loan Amount: | $835,000 |
| Holdback Amount:* | $164,500 |
| Borrower Cash Equity: | $74,500 |
| Est. After Repair Value (ARV): | $1,190,000 |
| Loan-to-ARV %: | 70% |
(1) Rehab budgets are part of the loan amount but distributed incrementally to borrower as repairs are confirmed via receipts, permits, and/or inspection(s).
Summary
The Borrower is obtaining a loan for the purpose of acquisition and rehab. The Borrower plans to perform $185,000 in renovations on the property and list it for sale as quickly as possible. The rehab budget involves repairs, including but not limited to electrical, plumbing, outdoor pool, cabinets, windows, doors, and landscaping. Additionally the investor will be adding square footage to make the building 1,900 sq ft. Realty Mogul Co. will disburse rehab funds based upon completion and inspection of improvements.
*Realty Mogul Co. will hold back $164,500 from the loan proceeds at closing and disburse these funds to the Borrower upon completion and inspection of improvements.
Investors are projected to receive interest payments of 10% with a final balloon payment at the end of the loan term. The security interest for the underlying borrower loan is a mortgage deed secured by the property in first position.
There is a three (3) month prepayment penalty associated with the loan. Any proceeds received from the prepayment penalty will be paid to the investors.
Risk Factors*
- Forward-Looking Statements: Investors should not rely on any forward-looking statements made regarding this opportunity, because such statements are inherently uncertain and involve risks. We use words such as “anticipated”, “projected”, “forecasted”, “estimated”, “prospective”, “believes”, “expects”, “plans”, “future”, “intends”, “should”, “can”, “could”, “might”, “potential”, “continue”, “may”, “will”, and similar expressions to identify these forward-looking statements.
- Market Risk: Investments related to mortgages secured by real estate are subject to market valuation risks that may be caused by changing economic and local market conditions. The property underlying the corresponding borrower loan is expected to have reasonably acceptable loan-to-value ratios and to meet certain other valuation criteria, but estimated values made when the loan is originated may not fully represent current market values, and subsequent market values will in particular be affected by changing economic or local market conditions. Such conditions are beyond the control of Realty Mogul and of the corresponding borrower on this loan. Such conditions may change due to factors such as local real estate market conditions, prevailing interest rates, the rate of unemployment, the level of consumer confidence, the value of the U.S. dollar, energy prices, changes in consumer spending, the number of personal bankruptcies, disruptions in the credit markets and other factors.
- Credit Risk: The borrower loan is being made with respect to a property that is in need of repairs, a situation that does not generally meet the financing criteria for conventional mortgages from institutional sources. Credit risk is inherent in the mortgage lending industry, and there can be no assurance that the credit worthiness of the borrower will be sufficient to assure the full repayment of the underlying borrower loan.
- Insurance Risk: The borrower will maintain insurance of the kind that is customarily obtained for similar properties, but is not expected to carry certain disaster-type insurance (covering events of a catastrophic nature, such as earthquakes). In the event that an uninsured disaster should occur to the real property underlying the corresponding borrower loan, or in the event a borrower does not maintain the required insurance and a loss occurs, Realty Mogul could experience difficulty recovering the principal amount of the corresponding borrower loan and any interest due thereon.
Risk Mitigation*
- There is a full personal guarantee on the underlying borrower loan.
- The borrower is a real estate company with a history and a track record of success.
- The security interest for the underlying borrower loan is a mortgage deed.
- 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.
*The above is not intended to be a full discussion of all the risks of this investment.
The property is located in the Hollywood Hills neighborhood of Los Angeles, California. Hollywood Hills has a population of approximately 22,988.
Hollywood Hills is located in the central region of Los Angeles and is part of the Santa Monica Mountains. The neighborhood is characterized by its expansive views of Los Angeles, high-income residents, and expensive homes. Hollywood Hills is bordered by Hollywood to the south, Hollywood Hills West to the west, Griffith Park to the east, and Burbank to the north. Popular recreational areas in the neighborhood include the Hollywood Bowl, John Anson Ford Amphitheatre, Lake Hollywood, and Forest Lawn Memorial Park.
The property is located in a suburban neighborhood in Hollywood Hills. It is in subpar condition relative to other properties nearby that are of similar age and size, providing for a potentially significant value add opportunity through repairs and cosmetic upgrades. The property is within 20 miles of the Pacific coast, and is in close proximity to shopping, schools, and parks. The property is also located within 1 mile of U.S. Route 101, connecting to the Greater Los Angeles Area.
