This southern California real estate investor completed a 1031 Exchange on this coastal Los Angeles County property had their bank financing turned down four days prior to the scheduled close of escrow. The next week would be a short week due to the holiday so they needed an instant loan approval and loan docs ready to sign the following morning in order to close escrow on-time.
Over the years, we’ve seen this particular bank deny loans at the very last moment several times, so this wasn’t much of a surprise to us. But to the borrowers, who had probably never had a loan application rejected in their entire life, it was a scary predicament to be faced with. The entire transaction was up in the air when they called seeking private money financing in a hurry.
First Capital Trust Deeds secured a 12-month private money bridge loan with a Los Angeles based private money fund at 75% LTV. The fund drafted up loan docs within a few hours of sending the loan application to their office and the client signed docs at escrow the following morning. This allowed the client to close on the 1031 Exchange on-time.
For the trust deed investor, they were able to fund a $1,000,000+ loan at 10.99% right before the end of the year, which helped their year-end numbers. Since the borrowers were incredibly strong, the property was in excellent condition, and all conditions to close had already been completed by the bank that had denied the loan, this was a fast closing loan that required relatively little work by the lender beyond drafting docs and doing a 5-minute property inspection.
The borrower paid off the private money bridge loan in less than 60 days, obtaining low interest rate jumbo bank financing.
In the end, it was an excellent private money bridge loan where all the parties benefited from the loan.
Private Money Bridge Loan Terms:
- $1,275,000 Loan Amount – 75% LTV
- 10.99% Interest-Only
- 12-Month Term
- No Prepayment Penalty
- No appraisal necessary – 5-minute site inspection