Borrowers sought a business purpose cash-out 2nd TD which will be used to build an ADU in the back of the property. The current 1st TD is conventional 30 year fixed with Wells Fargo, has a $178,000 balance, a 3.25% rate, and is in good standing.
The subject property is a traditional 2,149 SF home that sits on a huge 19,272 SF lot. It consists of 9 total rooms including 4 bedrooms, 3 bathrooms, a covered back patio and an attached 2-car garage. In the back of the property is also a detached 1,131 SF 3-car garage that is used to house the borrower’s toys and classic car. The new ADU will be built in the back corner of the property. The driveway will be extended so vehicles can drive straight to the ADU. Once completed, the ADU will be 730 SF with an attached 188 SF covered patio porch. Inside, it will have 2 bedrooms, 1 bathroom, a kitchen and a living room. The plan is to rent the ADU out immediately upon completion. The entire property sits in a nice suburban area of Palmdale that is situated near restaurants, schools, shopping medical facilities and golf courses. The exit strategy from our loan is a conventional refinance once construction is complete. The general contractor is confident the ADU will be completed in ~7 months.
What we like about this Trust Deed opportunity:
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- 65.00% CLTV and 60.45% Net CLTV
- 10.50% annualized return
- 7 months Guaranteed Interest
- 7 months Prepaid Interest
- $206,000 Funds Control
$234,750 2nd TD @ 10.50% 65.00% LTV on ARV, ADU Const. $46,950 min, Palmdale, CA
