Loan Purpose
Mortgage Vintage funded a $180,000 business-purpose cash-out second trust deed on a non-owner-occupied single-family residence in Fountain Valley, Orange County, California. The borrower sought this business-purpose cash-out loan to finance property improvement activities designed to increase the home’s marketability and resale value ahead of a planned fix-and-flip sale. The borrower had acquired the investment property in May 2026 and carried an existing first mortgage with a principal balance of $925,000 at a fixed rate of 10.50%, maturing co-terminously with this second trust deed. The loan carried a 10-month term, a 12.25% annualized interest rate, 6 months of guaranteed interest, and 6 months of prepaid interest, with a minimum investor participation of $60,000. The planned exit strategy was the outright sale of the subject property. This transaction was made available to accredited investors through the CrowdTrustDeed platform.
Why This Fountain Valley Loan Stood Out
- Conservative leverage: The loan was structured at a 65.00% CLTV and 64.26% Net CLTV against a recent as-is BPO value of $1,700,000, providing substantial protective equity of approximately $607,591 for investors.
- Prepaid and guaranteed interest: Investors benefited from 6 months of prepaid interest and 6 months of guaranteed interest, delivering immediate and protected income from day one regardless of early payoff.
- Desirable Orange County location: The subject property was situated in one of Fountain Valley’s most sought-after residential neighborhoods, characterized by high owner-occupancy rates, stable property values, and strong demand from both owner-occupants and investors.
- Income-producing asset: The property was leased at $6,500 per month through November 2026, providing ongoing cash flow during the improvement and listing phase.
- Clear exit strategy: The borrower’s plan to complete cosmetic upgrades and list the property for sale represented a well-defined, time-bound repayment path aligned with the 10-month loan maturity.
Property Description
The subject property was a well-maintained single-family residence located on Filbert Street in Fountain Valley, California. The home offered approximately 2,076 square feet of living space on a 0.16-acre lot and featured 4 bedrooms, 2.5 bathrooms, an attached two-car garage, an in-ground swimming pool, a fireplace, and a covered outdoor entertaining area. Originally built in 1971, the property was in overall good condition, with minor cosmetic improvements identified as the primary opportunity to enhance value and buyer appeal. The as-is BPO value was established at $1,700,000 at the time of loan origination. The neighborhood offered convenient access to Interstate 405, Huntington Beach, major shopping centers, restaurants, healthcare facilities, and highly rated schools, with nearby parks and recreational amenities further supporting the area’s strong residential desirability.
Investment Summary
Mortgage Vintage successfully funded this Fountain Valley loan at $180,000, representing a 65.00% CLTV and 64.26% Net CLTV against the $1,700,000 as-is appraised value. The 10-month loan term carried a 12.25% annualized yield for participating investors, with both 6 months of prepaid interest and 6 months of guaranteed interest providing enhanced income certainty. The minimum investment threshold was $60,000. Net investor equity protection stood at approximately $607,591 on an as-is basis. The loan was structured in the second lien position behind the existing first trust deed of $925,000. The borrower’s credit profile reflected past challenges stemming from a documented medical hardship; however, the underwriting team at Mortgage Vintage assessed the overall collateral strength, equity cushion, and defined exit strategy as sufficient to support the investment on its merits.
Financial Details
| Field | Value |
|---|---|
| Loan Amount | $180,000 |
| Interest Rate | 12.25% per annum |
| Lien Position | 2nd Trust Deed |
| Loan Type | Business-Purpose Cash-Out |
| Loan Term | 10 Months |
| CLTV | 65.00% |
| Net CLTV | 64.26% |
| As-Is BPO Value | $1,700,000 |
| 1st TD Balance | $925,000 |
| Net Investor Equity | $607,591 |
| Guaranteed Interest | 6 Months |
| Prepaid Interest | 6 Months |
| Minimum Investment | $60,000 |
| Exit Strategy | Sale of Property |
| Occupancy | Non-Owner Occupied |
Property Highlights
| Field | Value |
|---|---|
| Property Type | Single-Family Residence (SFR) |
| Location | Fountain Valley, Orange County, CA |
| Living Area | Approx. 2,076 sq ft |
| Lot Size | 0.16 Acres |
| Bedrooms | 4 |
| Bathrooms | 2.5 |
| Year Built | 1971 |
| Garage | Attached Two-Car |
| Pool | In-Ground Swimming Pool |
| Additional Features | Fireplace, Covered Outdoor Entertaining Area |
| As-Is BPO Value | $1,700,000 |
| Current Monthly Rent | $6,500/month |
Frequently Asked Questions
What is a second trust deed, and how does it differ from a first mortgage in a deal like this?
A second trust deed is a loan secured by real property in the junior lien position, meaning it sits behind an existing first mortgage in terms of repayment priority. In this Fountain Valley transaction, Mortgage Vintage funded a $180,000 second trust deed while a $925,000 first mortgage remained in place. Investors in the second position accept a slightly higher risk profile in exchange for a higher yield — in this case 12.25% — while still benefiting from the substantial equity cushion between the total debt and the property’s appraised value. The combined loan-to-value ratio of 65.00% provided meaningful downside protection for participating investors.
Why do hard money lenders use guaranteed interest and prepaid interest structures?
Guaranteed interest ensures that investors receive a minimum number of months of interest income regardless of when the borrower repays the loan, protecting returns in the event of early payoff. Prepaid interest means those funds are collected at closing and held in advance, eliminating the collection risk entirely. In this deal, both 6 months of guaranteed interest and 6 months of prepaid interest were structured into the loan, giving accredited investors confidence in their income stream from day one. These features are especially valuable on shorter-term fix-and-flip loans where the borrower may sell the property and retire the debt well before maturity.
What makes Orange County, California a strong market for trust deed investments secured by residential property?
Orange County consistently ranks among the most resilient residential real estate markets in California, driven by limited housing supply, high demand from both owner-occupants and investors, strong income demographics, and proximity to major employment centers. Fountain Valley in particular features stable property values, high owner-occupancy rates, and excellent access to regional infrastructure including freeways, beaches, and top-rated schools. These fundamentals support collateral values and help ensure that the exit strategy — whether a sale or refinance — remains executable even in softer market conditions, which is a key underwriting consideration for Mortgage Vintage when evaluating trust deed loan opportunities in this region.
Mortgage Vintage, Inc. is a California DRE-licensed hard money lender and trust deed investment firm with deep expertise in structuring and funding short-term real estate loans throughout California, including complex second lien and cash-out transactions in high-value markets like Orange County. With a rigorous underwriting process focused on collateral quality, equity protection, and clearly defined exit strategies, Mortgage Vintage has built a track record of successfully connecting accredited investors with income-producing trust deed opportunities backed by real property.