Jan312017

How Proven Underwriting Guidelines lead to successful loans and stable investor yields?

During the successful 2016 8 Year Old Little League season, our coaches kept reiterating to “Keep Your Eye On the Ball”.   Whether catching a fly ball, fielding a grounder or trying to hit a fastball, the message was the same to our CrowdTrustDeed Kids;  Watch the ball.

Similarly, I tried to apply focus to Mortgage Vintage and CrowdTrustDeed’s Hard Money Lending and Trust Deed Investment business’ in 2016.  Like a ball caught in the web of the glove or a crisply hit line drive, the focus paid off and the company reached our growth objectives and we achieved great success in 2016 with the help of our investors and lenders.  I wanted to take a moment to reflect on a successful 2016 and highlight some of our accomplishments that we can build on for this year.

As a hard money lender in Orange County, Mortgage Vintage finished the year with nearly $26 Mil in loan originations, comprised by our typical mix of business purpose scenarios:

  • PURCHASE LOANS, both residential and commercial
  • REFINANCE LOANS, generally using equity in the borrower’s property to generate liquidity for investment projects.

Here are some relevant sample metrics from our 2016 production:

  • Average Investor Yield:                                                   10.03%
  • Average Loan to Value on 1st Trust Deeds:                    54.77%
  • Average Combined Loan to Value on 2nd Trust Deeds   58.08%
  • Average Loan Term:                                                         27 mos.
  • 2016 Amount interest paid to Lenders                            >$4.15 Mil

Following are a few notable hard money loan scenarios we facilitated in 2016:  In no particular order:

  • $400,000 cash out to fund improvements on a breathtaking view SFR rental property in Malibu, CA
  • $850,000 fix n flip loan converting a bungalow to a beautiful 2 story contemporary home in Venice, CA
  • $2,535,000 cash out on an SFR to fund a new business venture in Bel Air, CA
  • $650,000 rehab loan to finish a SFR remodel in Chatsworth, CA
  • $375,000 business purpose loan for improvements to a restaurant/bar in the Arts District, Los Angeles
  • $300,000 hard money commercial loan for cash out for a new roof and repairs on a 30-unit Apartment Complex, Glendale CA
  • $950,000 bridge Loan in Los Angeles, allowing an SFR buyer to close on a new purchase while selling their existing SFR

Mortgage Vintage continues to underwrite our loans with a conservative bias.  We seek to fund only those loans that borrowers can afford, and that have a very high likelihood of timely repayment. While potentially more lucrative, we never go into a deal with a strategy of owning the property that secures our loan…in other words, hoping the borrower will default…which is not our style.  Do you have any scenarios where you needed or need a Hard Money Loan?  We would like to know.