Loan Purpose
Mortgage Vintage successfully funded a $100,000 business-purpose second trust deed secured by an owner-occupied duplex in the Koreatown/Mid-Wilshire corridor of Los Angeles, California. The long-time property owner, who had held the property for more than 33 years, sought a cash-out refinance to deploy capital toward business-purpose investment activities, including supporting growth initiatives, branding improvements, marketing, and additional real estate ventures. A portion of the loan proceeds was also used to reinstate the existing first mortgage and bring it current. This business-purpose cash-out loan was structured to give the borrower the liquidity needed to move forward while preserving substantial equity in the collateral property. Trust deed investors who participated in this offering through the CrowdTrustDeed platform earned a 12.00% annualized yield backed by a well-maintained Los Angeles duplex.
Why This Los Angeles Duplex Loan Stood Out
- Low combined leverage at approximately 51.57% CLTV based on a $1,500,000 As-Is BPO value, leaving roughly $726,500 in protective net investor equity.
- LAR4 zoning on a 9,024-square-foot lot provided meaningful redevelopment and ADU upside beyond the immediate collateral value.
- The borrower’s 33-plus-year ownership history demonstrated deep commitment to the property and minimized voluntary default risk.
- The existing first mortgage carried a fixed interest rate with a long remaining term, reducing refinance pressure on the senior lien.
- A 12.00% annualized investor yield with 6 months of guaranteed interest and 3 months of prepaid interest offered investors strong, front-loaded income protection.
- The property required only minor cosmetic work, estimated at approximately $8,000, supporting the As-Is valuation with minimal deferred maintenance risk.
- Koreatown/Mid-Wilshire’s stable demand, dense retail and transit access, and desirable Los Angeles location reinforced collateral quality.
Property Description
The collateral securing this Los Angeles duplex loan was a well-maintained residential duplex situated in the heart of the Koreatown/Mid-Wilshire corridor of Los Angeles County. Originally constructed in 1909, the property offered approximately 2,792 square feet of living area on a 9,024-square-foot lot. The structure featured four bedrooms, two bathrooms, wood-frame construction, a detached two-car garage, and a fireplace. The property was owner-occupied, with the borrower’s family also residing on-site. An Interior BPO established an As-Is Value of $1,500,000 and an As-Repaired Value of $1,525,000. The BPO noted that the property ranked among the largest residential properties in the immediate neighborhood and required only approximately $8,000 in cosmetic interior and exterior painting to reach its repaired value. LAR4 zoning enhanced the long-term redevelopment and ADU potential of the site. The surrounding neighborhood offered excellent access to shopping, dining, employment centers, and public transportation, supporting sustained collateral demand.
Investment Summary
Mortgage Vintage originated this $100,000 second trust deed at a 12.00% annualized interest rate with a 24-month term. The loan was structured with 6 months of guaranteed interest and 3 months of prepaid interest, providing investors with meaningful income certainty from the outset. The combined loan-to-value ratio stood at approximately 51.57% based on the $1,500,000 As-Is BPO, with a net CLTV of approximately 51.33% after accounting for transaction costs. Approximately $726,500 in protective net investor equity remained between the total debt and the appraised value. The minimum investment was $50,000. The borrower’s exit strategy was refinance or sale following stabilization of business activities and improved cash flow. The credit profile reflected a 607 FICO score, which was contextualized by documented temporary hardships including bereavement, job loss, and family medical expenses — all of which were considered within Mortgage Vintage’s underwriting framework alongside the strong collateral fundamentals.
Financial Details
| Field | Value |
|---|---|
| Loan Amount | $100,000 |
| Interest Rate | 12.00% Annualized |
| Lien Position | 2nd Trust Deed |
| Loan Type | Cash-Out Refinance — Business Purpose |
| Loan Term | 24 Months |
| Guaranteed Interest | 6 Months |
| Prepaid Interest | 3 Months |
| As-Is BPO Value | $1,500,000 |
| As-Repaired Value | $1,525,000 |
| CLTV | 51.57% |
| Net CLTV | 51.33% |
| Protective Net Investor Equity | ~$726,500 |
| Minimum Investment | $50,000 |
| Occupancy | Owner-Occupied |
| Exit Strategy | Refinance or Sale |
Property Highlights
| Field | Value |
|---|---|
| Property Type | Duplex (SFR) |
| Location | Koreatown/Mid-Wilshire, Los Angeles, CA |
| Year Built | 1909 |
| Living Area | ~2,792 Sq Ft |
| Lot Size | 9,024 Sq Ft |
| Bedrooms | 4 |
| Bathrooms | 2 |
| Construction | Wood Frame |
| Garage | Detached 2-Car |
| Zoning | LAR4 (Redevelopment / ADU Potential) |
| Occupancy Status | Owner-Occupied |
| Borrower Ownership Tenure | 33+ Years |
Frequently Asked Questions
How does Mortgage Vintage evaluate a business-purpose second trust deed in Los Angeles when the borrower has a lower FICO score?
Mortgage Vintage’s underwriting approach for business-purpose second trust deeds in Los Angeles weighs collateral quality and equity protection heavily alongside credit scores. In situations where a borrower’s FICO is lower due to documented temporary hardships — such as bereavement, job loss, or family medical expenses — the underwriting team examines the context behind the credit events, the depth of equity in the property, the borrower’s ownership history, and the overall loan-to-value position. In this completed transaction, a 51.57% combined LTV on a well-maintained Los Angeles duplex provided substantial protective equity that supported the investment despite the credit profile.
What makes LAR4-zoned properties in Koreatown and Mid-Wilshire attractive as hard money loan collateral?
LAR4 zoning in Los Angeles allows for higher-density residential development, which adds a layer of long-term value potential beyond a property’s current use. For trust deed investors, this means the collateral has multiple exit paths — it can be sold as a residential property, repositioned as a rental, or eventually redeveloped — all of which support the collateral’s marketability and residual value in a default scenario. The Koreatown/Mid-Wilshire corridor is a high-demand urban neighborhood with strong transit access and consistent buyer and renter interest, further reinforcing the collateral quality on loans like this one.
What does guaranteed interest mean for trust deed investors, and how did it apply to this Los Angeles duplex loan?
Guaranteed interest means that regardless of when the loan is paid off, the investor is entitled to receive interest income for a minimum specified period. On this completed transaction, trust deed investors received 6 months of guaranteed interest, meaning even if the borrower had paid the loan off early, investors would still have earned the equivalent of 6 months of 12.00% annualized returns. Additionally, 3 months of prepaid interest was collected at closing, giving investors immediate income from the moment the loan funded. Together, these provisions provided investors with meaningful income certainty and protection against early payoff risk.
Mortgage Vintage, Inc. is a California DRE-licensed hard money lender and trust deed investment company with decades of experience originating, underwriting, and servicing private real estate loans secured by California properties. Our team brings hands-on expertise in evaluating complex collateral situations, structuring investor-protective loan terms, and connecting qualified borrowers with trust deed investors seeking consistent, asset-backed returns in dynamic markets like Los Angeles.