Loan Purpose
Mortgage Vintage successfully funded a $500,000 first trust deed for an experienced real estate developer seeking temporary liquidity for business-purpose investment activities. The borrower, who had over 40 years of experience in residential, commercial, hospitality, and mixed-use developments, required cash-out financing while completing entitlement approvals and preparing for permanent development financing. The borrower demonstrated strong financial capacity with bank statements showing upwards of $2 million in cash liquidity.
Pacifica Oceanfront Loan Highlights
- Rare oceanfront development parcel in highly desirable coastal location
- Experienced borrower with substantial liquidity and proven track record
- Conservative 25% loan-to-value ratio providing excellent investor protection
- Attractive 13% interest rate with guaranteed and prepaid interest features
- Strategic location with proximity to San Francisco and Silicon Valley
- Limited supply of ocean-view land creating strong appreciation potential
Property Description
The collateral consisted of a remarkable 3.82-acre oceanfront development parcel positioned along the coastal bluff in Pacifica, California. This rare property featured unobstructed panoramic views of the Pacific Ocean, including coastal bluffs, coastal coves, and hillsides. The land was strategically located along one of Northern California’s most scenic coastal corridors with immediate access to Highway 1 and convenient proximity to San Francisco, Silicon Valley, and San Francisco International Airport. The property offered significant advantages including existing utility availability, favorable residential zoning, and strong demand for luxury coastal estates. A professional appraisal concluded an as-is market value of $2,000,000, providing substantial equity protection for this Pacifica oceanfront loan.
Investment Summary
This first trust deed investment offered exceptional risk-adjusted returns with a 25% loan-to-value ratio and 23.19% net LTV on the appraised value of $2,000,000. The loan carried a 13% interest rate with attractive investor protections including six months of guaranteed interest and six months of prepaid interest. The 24-month term provided the borrower sufficient time to complete entitlements and secure permanent financing. Investors participated through the CrowdTrustDeed platform with a minimum investment of $50,000. The borrower’s planned exit strategy involved refinancing with permanent development financing upon completion of the entitlement process.
Financial Details
| Field | Value |
|---|---|
| Loan Amount | $500,000 |
| Interest Rate | 13.00% |
| Loan Term | 24 Months |
| Lien Position | 1st Trust Deed |
| Loan-to-Value | 25.00% |
| Net LTV | 23.19% |
| Appraised Value | $2,000,000 |
| Guaranteed Interest | 6 Months |
| Prepaid Interest | 6 Months |
Property Highlights
| Field | Value |
|---|---|
| Property Type | Oceanfront Development Land |
| Location | Pacifica, San Mateo County, CA |
| Size | 3.82 Acres |
| Views | Unobstructed Pacific Ocean Panoramic |
| Zoning | Favorable Residential |
| Utilities | Available |
| Highway Access | Immediate Highway 1 Access |
| Existing Debt | Free and Clear |
Frequently Asked Questions
What makes oceanfront land loans attractive to private investors?
Oceanfront land loans offer unique investment advantages including limited supply, strong appreciation potential, and typically conservative loan-to-value ratios. The scarcity of coastal development parcels, especially in desirable markets like San Mateo County, creates inherent value protection. Additionally, oceanfront properties maintain strong demand from luxury home buyers and developers, providing multiple exit strategies for borrowers.
How do entitlement delays affect land development loans?
Entitlement processes can be lengthy and unpredictable, which is why experienced lenders structure land development loans with appropriate terms and borrower qualifications. In this case, the 24-month term provided sufficient time for the entitlement process, while the borrower’s substantial liquidity and development experience mitigated execution risks. The conservative 25% LTV also provided significant downside protection.
Why do land loans typically carry higher interest rates than improved property loans?
Land loans generally carry higher interest rates due to their development nature and longer hold periods compared to stabilized income-producing properties. However, they’re often structured with lower loan-to-value ratios and additional protections like guaranteed interest periods. The 13% rate on this deal reflected both the land use and the borrower’s business purpose, while the conservative underwriting provided appropriate risk-adjusted returns for investors.
Mortgage Vintage, Inc. is a California Department of Real Estate licensed hard money lender (DRE #02041329) specializing in asset-based lending solutions for real estate investors and developers. Our experienced underwriting team and deep expertise in trust deed investments enable us to structure creative financing solutions for complex deals like oceanfront development parcels.