Loan Purpose
Mortgage Vintage successfully funded a $1,950,000 business-purpose first trust deed on a non-owner-occupied Spanish-style single-family residence with a detached accessory dwelling unit (ADU) situated in the Beverly Grove / West Hollywood neighborhood of Los Angeles, California. The Beverly Grove West Hollywood loan was structured as a rate-and-term refinance combined with a funds control component, enabling the payoff of approximately $1,578,000 in existing liens while placing $460,000 in controlled renovation funds to be disbursed through third-party inspections as construction milestones were completed. The borrower, an experienced real estate investor and short-term rental operator, brought approximately $380,000 in cash-to-close equity to the transaction, demonstrating meaningful skin in the game and strong commitment to the project’s success. Loan proceeds were designated solely for business-purpose investment activities related to the subject property and the borrower’s broader investment portfolio. For investors interested in similar opportunities, Mortgage Vintage also offers a business-purpose cash-out hard money loan program for qualifying investment properties throughout California.
Why This Beverly Grove West Hollywood Loan Stood Out
- Conservative Net LTV: While the gross LTV was 65.00% based on the appraised after-completion value of $3,000,000, the $460,000 funds control holdback reduced the net LTV to just 44.14%, providing investors with a substantial equity cushion throughout the renovation period.
- Controlled Disbursement Structure: The $460,000 renovation budget was administered through a rigorous third-party inspection and controlled disbursement process, ensuring funds were released only as verified construction milestones were achieved and protecting the collateral’s value at every stage.
- Proven Income-Generating Asset: The subject property was permitted for and previously operated as a short-term rental, with the borrower’s broader portfolio demonstrating substantial confirmed bookings. The projected post-renovation monthly income from the investment portfolio was estimated at $35,000–$40,000, providing a credible path to loan servicing and repayment.
- Strong Equity Contribution: The borrower contributed approximately $380,000 in cash at closing, reinforcing alignment of interest and reducing overall leverage in the transaction.
- Prime Los Angeles Submarket: The property’s location in Beverly Grove / West Hollywood—proximate to Melrose Avenue, the Sunset Strip, and the Beverly Center—placed it within one of Los Angeles’ most resilient and in-demand residential submarkets, supporting the $3,000,000 ARV established by a newly ordered appraisal.
- Guaranteed Interest Protection: The loan included six months of guaranteed interest, providing trust deed investors with predictable, protected income regardless of early payoff.
Property Description
The subject property was a one-story, Spanish-style single-family residence with a detached ADU/guest house located in the Beverly Grove / West Hollywood neighborhood of Los Angeles, California. At origination, the main residence comprised approximately 1,784 square feet situated on a 6,162-square-foot lot, accompanied by a 360-square-foot detached guest house/studio. The interior featured multiple living areas, a kitchen, a dining area, four bedrooms, four bathrooms, patio and deck space, a large backyard, and detached guest quarters. The planned renovation scope targeted an expansion to approximately 2,372 square feet for the main residence, incorporating luxury interior finishes, modernized kitchen and bathrooms, and full renovation of the detached ADU. The property’s neighborhood was characterized by a high concentration of renovated Spanish and contemporary luxury homes, tree-lined streets, and proximity to premier dining, retail, and entertainment destinations. Plans, permits with extensions, and a licensed general contractor were in place at the time of funding. Mortgage Vintage’s due diligence included a new after-completion appraisal reflecting an ARV of $3,000,000 and a construction feasibility report validating the $460,000 renovation budget. Trust deed investors can explore current and past offerings through the CrowdTrustDeed platform, where Mortgage Vintage lists its trust deed investment opportunities.
Investment Summary
This completed transaction was structured as a 12-month, first trust deed loan at a 12.00% annual interest rate with a minimum investment of $65,000. The loan carried a 65.00% gross LTV and a 44.14% net LTV after accounting for the $460,000 funds control holdback, both calculated against the $3,000,000 after-completion appraised value. Investors received the benefit of six months of guaranteed interest, providing meaningful downside protection and income predictability. The borrower’s planned exit strategy was refinance upon project completion, supported by the property’s strong post-renovation value and the borrower’s active efforts to stabilize and improve creditworthiness. Mortgage Vintage managed the full funds control and disbursement process, ensuring that renovation dollars were deployed responsibly and in alignment with the construction feasibility report. This transaction reflected Mortgage Vintage’s disciplined approach to underwriting complex, value-add trust deed investments in premier Los Angeles submarkets.
Financial Details
| Field | Value |
|---|---|
| Loan Amount | $1,950,000 |
| Interest Rate | 12.00% per annum |
| Lien Position | 1st Trust Deed |
| Loan Type | Rate & Term Refinance + ADU Construction |
| Loan Term | 12 Months |
| Guaranteed Interest | 6 Months |
| Gross LTV | 65.00% |
| Net LTV (with Funds Control) | 44.14% |
| After-Completion Appraised Value (ARV) | $3,000,000 |
| Funds Control Amount | $460,000 |
| Liens Paid Off | $1,578,000 |
| Borrower Cash-to-Close | ~$380,000 |
| Minimum Investment | $65,000 |
| Occupancy | Non-Owner Occupied (Investment) |
| Exit Strategy | Refinance or Sale Upon Completion |
Property Highlights
| Field | Value |
|---|---|
| Property Type | Single-Family Residence (SFR) + Detached ADU |
| Architectural Style | One-Story Spanish-Style |
| Location | Beverly Grove / West Hollywood, Los Angeles, CA |
| Main Residence Size (Pre-Renovation) | 1,784 SF |
| Main Residence Size (Post-Renovation) | ~2,372 SF |
| Lot Size | 6,162 SF |
| Detached ADU / Guest House Size | 360 SF |
| Bedrooms | 4 |
| Bathrooms | 4 |
| Key Features | Multiple living areas, kitchen, dining area, patio/deck, large backyard, detached guest quarters |
| Renovation Scope | Luxury interior finishes, modernized kitchen & bathrooms, full ADU renovation, landscaping |
| Short-Term Rental Status | Permitted for Short-Term Rental (Airbnb) |
| Neighborhood Highlights | Proximity to Melrose Avenue, Sunset Strip, Beverly Center; tree-lined streets; luxury home submarket |
| Projected Post-Renovation Monthly Income | $35,000–$40,000 (combined portfolio) |
Frequently Asked Questions
What is a funds control structure, and why does it lower the effective LTV on an ADU construction loan?
In a funds control arrangement, a portion of the loan proceeds—in this case $460,000—is withheld at closing and released incrementally only after third-party inspections confirm that specific construction milestones have been completed. Because those funds are not disbursed upfront, the lender’s actual capital at risk at any given moment is lower than the total loan commitment. In this transaction, the $460,000 holdback reduced the net LTV from 65.00% to 44.14% relative to the $3,000,000 after-completion appraised value, giving trust deed investors a substantially larger equity buffer than the gross LTV alone would suggest.
Why do hard money lenders in Beverly Grove and West Hollywood price loans based on after-completion value rather than current as-is value?
When a property is undergoing renovation or ADU construction, its current as-is value may understate the collateral’s true worth upon project completion. Lenders like Mortgage Vintage commission independent appraisals that establish an after-renovation value (ARV) supported by comparable luxury sales in the submarket. Using the ARV allows the loan structure to reflect the property’s trajectory rather than its interim state, while the funds control mechanism ensures the borrower must actually complete the work to unlock the proceeds—aligning incentives and protecting investor capital throughout the construction period.
How does a six-month guaranteed interest provision protect trust deed investors in a short-term hard money loan?
A guaranteed interest clause requires the borrower to pay interest for a minimum period—six months in this transaction—regardless of when the loan is actually repaid. In value-add or renovation scenarios, borrowers sometimes complete projects ahead of schedule and refinance quickly, which could otherwise shorten an investor’s income window. The guarantee ensures investors receive predictable, contractually protected returns for the specified minimum term, making the investment economics more reliable and easier to underwrite from an income-planning perspective.
Mortgage Vintage, Inc. is a California DRE-licensed hard money lender and trust deed investment company with extensive experience originating, underwriting, and servicing complex business-purpose loans secured by residential and commercial real estate throughout California. Our team’s deep familiarity with high-value Los Angeles submarkets, ADU construction financing, and funds control structures enables us to deliver disciplined, investor-focused trust deed opportunities that balance yield with meaningful collateral protection.