1. Loan Purpose
The borrower obtained a business-purpose, non-owner-occupied loan secured by the subject property to provide funds for a separate real estate development project in Los Gatos, CA. The borrower is a General Partner in a Residential Development Real Estate Fund focusing on SFR development in the Bay Area. Proceeds from the new 2nd Trust Deed are structured as a cash-out loan, providing capital flexibility while the borrower continues to operate the property as an income-producing asset. The business purpose loan is for a non-owner occupied triplex and is underwritten on collateral value and existing equity rather than personal use considerations.
2. Property Description
The fully occupied collateral is a three-unit residential income property (triplex) located at 4200 Shorecrest Lane, Corona del Mar, California, within an established coastal Orange County submarket. The property was built in 1960 and contains approximately 2,797 square feet on a 5,932 square foot lot, zoned for multi-family residential use.
An independent appraisal dated December 15, 2025 concluded an As-Is market value of $3,400,000, with the property observed to be in overall good condition and conforming to neighborhood use.
The investment is secured by a 2nd Trust Deed, behind an estimated $1,442,950 first mortgage at a 3.375% interest rate, resulting in a total combined loan amount of $2,210,950. This equates to a combined loan-to-value (CLTV) of approximately 65.0%, calculated strictly from the As-Is appraised value.
What We Like
From a credit perspective, several aspects stand out:
- The loan is supported by a coastal Corona del Mar location, an area with historically strong demand and limited supply.
- A moderate 65% CLTV, based on a current As-Is appraisal, provides a measurable equity cushion despite the junior lien position.
- The property is an income-producing triplex, offering multiple rental units rather than reliance on a single tenant.
- The loan term is short-duration and interest-only, which may align with a defined refinance or sale strategy within the stated maturity window.
