Luxury real estate investors used a private money financing loan in the form of 75% purchase/100% fix and flip financing from First Capital Trust Deeds.
This high-leverage luxury home rehab financing opportunity came to us already in escrow with a relatively short deadline to close (20 days). To match the sponsor’s (buyer) borrowing requirement with the trust deed investor’s (lender) comfort level for a quick close, we were able to secure 75% of the purchase price ($1,875,000) and 100% of the rehab budget ($825,000).
In the luxury fix and flip hard money financing market, there are a handful of lenders who will lend an experienced buyer 75-80% of the purchase price and 80-100% of the rehab budget. However, in order to issue that kind of high-leverage loan, the lenders will often require extensive financial documentation including tax returns, year-to-date audited financials, background checks, and often charge significant upfront fees on top of loan origination fees in order to begin working with a borrower.
The big selling point with the buyers in going with the First Capital Trust Deeds financing package, beyond the high-LTV and low upfront costs, was the relative ease of closing. Our lender didn’t require detailed financial records or charge upfront fees. Instead, the lending decision was based upon the sponsor’s track record along with the as-is and after repaired value (ARV) of the collateral.
Ease of Closing Conditions Required of the Borrowers:
- Real Estate Resume – Previous Successful Projects
- Cost Breakdown Including Construction Draw Schedule
- Interior & Exterior Valuation
- 20 Day Close