Loan Purpose
The borrower sought a business-purpose cash-out loan secured by a non-owner occupied single-family residence. Proceeds from the new second trust deed is intended to support the development of an Accessory Dwelling Unit (ADU) on the property.
Based on the valuation commentary, the property’s lot configuration and surrounding rental demand—particularly from nearby Chapman University—support the potential for an ADU or garage conversion.
This loan functions as bridge capital to enable property improvements and increase income-generating potential.
Property Description
The collateral is a single-family residence located at 1315 W. Beverly Dr., Orange, CA, built in 1955 with a recent remodel and comprises approximately 1,263 square feet with a 6,150 square foot lot.
The property is currently in average condition with no major deferred maintenance noted, according to the BPO. It is situated in a suburban neighborhood with stable market conditions and consistent buyer demand.
The Broker Price Opinion indicates an As-Is value of approximately $1,100,000.
- Existing 1st Trust Deed: ~$497,000
- New 2nd Trust Deed: $150,000·
- Total Debt: $647,000
This results in an estimated CLTV of ~58.82% based on the As-Is value of $1.1 Mil.
The investment is secured in a 2nd lien position behind the existing first mortgage. The borrower has recently used his credit cards while he invests in a new business venture in the Philippines. Revenue from that venture is scheduled to arrive later this year which will allow the borrower to pay down the high balance credit cards.
What We Like
- Moderate leverage profile with an estimated ~58.8% CLTV based on As-Is value, providing a meaningful equity cushion
- Collateral located in an established Orange County submarket with strong comparable sales activity and stable pricing trends
- Property is currently in average condition with no immediate repair requirements, reducing near-term capital risk
- Functional single-family layout on a 6,150 SF lot, supporting potential ADU development
- ADU strategy aligns with local rental demand drivers, particularly student housing demand noted in the BPO
- Short-term structure limits long-duration exposure while maintaining defined exit timing
$150,000 2nd TD @ 11.00%, SFR, 58.82% CLTV, 18 mo., NOO, $50,000 Min., 6 mo. guar. int., Orange, CA
