Example #1:

Loan Against a Half-Finished Duplex and House

• An amateur spec builder with excellent credit had started building a house and duplex “on spec” in a second-class Colorado mountain town with his own funds. After having completed 65% of the project, he ran out of money.
  
• Three banks turned him down to complete the project because they could not get the title company to give them “mechanic’s lien protection” and thus they could not be assured they were in first position. (Subcontractors acquire a senior lien position against a project if not paid unless the mortgage or deed of trust is recorded before commencement of construction work.)
  
• We conducted an extensive investigation into the builder’s finances to ensure most subcontractors were paid, and we made the loan without the title company’s assurance that we were, in fact, in first position.
  
• Our loan was for $162,500, which was about 50% of the value as-is of the house and duplex. Our fee came to 5.00% or $8,125.00 plus 14.00% interest for six months. The six payments were withheld at closing because the borrower also could not prove any income.

Example #2:

Fast Vacant Land Loan

• A self-employed borrower without the ability to prove income, but with good credit, owned a building site in an upscale development free and clear. He came to us needing $50,000 dollars now.
  
• Our appraiser went out on three hours’ notice and appraised the property at $100,000.
  
• We closed within 48 hours at our title company.
  
• For this service, we charged a $3,500 loan fee plus 12.00% interest. The loan contained a 24-month balloon and was payable interest only.

Example #3:

Development Land Bought With No Money Down

• A developer with more ambition than ready cash, but with an excellent reputation, found a site for $500,000 on which he could build 48 condo units.
  
• The seller, who apparently needed to sell badly, agreed to carry a $300,000 second note behind our $200,000 first deed of trust.
  
• The developer expects to have all his approvals in place soon and intends to pay us off with the proceeds of a new construction loan. The holder of the $300,000 second has agreed to subordinate to the new construction loan and expects to be paid after the units sell.
  
•  Our rate was 15.00% with 5 points and all payments escrowed up front.

Example #4:

Loan Against 70 Building Sites While Borrower has $200,000 Judgment Against Him

We normally do not like making loans to people with severe credit issues, but there are always exceptions. Here is one:

• An owner of a 70-lot manufactured homes subdivision was in foreclosure because he had fallen behind on paying the first loan. The reason he couldn’t pay was that he couldn’t sell the lots (even though he had three buyers waiting in the wings to give him $10,000 per lot) because of a $200,000 judgment which attached to the property. The judgment holder was not to be talked to
  
• With the help of the owner, we purchased the first lien in foreclosure and approached the judgment holder who finally saw the light. We explained that, unless he cooperated, he would lose his position and perhaps get nothing.
  
• We made a loan to pay off the first and to make a $25,000 good faith payment on the judgment. The judgment holder subordinated to our new loan and agreed to a partial release provision of $4,000 per lot sale. We also agreed to a partial release provision so the lots could be sold in an orderly manner.
  
• Our loan was for $175,000 ($2,500 per lot). We charged 15.00% plus a flat $10,000 fee for negotiating this deal.

Example #5:

Vacant Motel Purchase with No Money Down

• Our borrower was an “outsourced” middle-rank corporate type. He and his wife wanted to go back to the small Midwestern town they grew up in. They found a motel with great potential but badly in need of on-site, hands-on management. The owner wanted to sell badly. The borrower had some money, but all of it needed to be kept on hand to fix up the place and to use as living expenses until the motel was turned around.
  
• The borrower paid $485,000 for the property with the help of a two-year loan from us for $175,000 at 12.00%. The seller carried the rest on favorable terms. The borrower has been in touch with an SBA lender who assures him that he can get a nice new low-interest loan within two years. Our fee was 10.00% plus the cost of an airplane trip to see the property.