Breakdown of Typical Investment Terms
Historically, we have funded loans from $20,000 to $1.7 million. Recently, we have funded a number of loans with principal amounts greater than $750,000. Our lending policy limits the maximum loan amount to 10% of our loan portfolio.
We offer up to 65%.
We offer a fixed rate of typically 12%.
Origination fees range from 2.5 to 3% in the case of one-year loans and 5%, in the case of three-year loans. In the case of three-year loans, the points will be credited back to the borrower based on the duration of the loan should the loan balance be paid off early. In addition, if the term of the loan is extended, additional points are payable upon the extension.
Out terms generally offer one to three year terms with early termination in the event of a sale of the property. We consider granting loan extensions if the borrower has paid the loan as agreed and is otherwise in good standing with the company.
A borrower may prepay the loan at any time without penalty.
Covenants are in place to ensure timely payments on all taxes, insurance, assessments and similar charges with respect to the property; also to maintain hazard insurance and to maintain and protect the property.
Monthly interest is only payable in arrears. Principal is due in a “balloon” payment at the maturity date.
The loan is evidenced by a promissory note, which is secured by a first mortgage lien on the real property owned by the borrower. In addition, each loan is guaranteed by the principals of the borrower, which may be collaterally secured by a pledge of the guarantor’s interest in the borrower or other real estate owned by the guarantor.