Loan Terms & Purpose:
Lien Position: 1st Trust Deed
Investor Yield: 11.00%
Loan Amount: $1,050,000
Loan Term: 24-month balloon
Our Sponsor – a seasoned and sophisticated real estate developer – purchased a heavily discounted real estate secured note from a trustee in an off market note sale transaction. Understanding the economic benefits of the underlying project securing the note, the Sponsor chose to advance on the note and take ownership of the property via foreclosure. The Sponsor acquired title to the subject property in May of 2011 at the trustee’s sale auction as the beneficiary of the note.
Immediately upon acquiring title to the subject property, the Sponsor took the initiative to get this property properly positioned for rehabilitation. The Sponsor paid ALL county property taxes current (approx. $230,000.00), ascertained approved building plans, and pulled building permits through the City of Palm Springs. The Sponsor paid for all of the above costs out of his pocket and in cash in addition to the funds he advanced during the note purchase and foreclosure process. We have documented in excess of $750,000.00 of hard cash advanced by the Sponsor towards this project to-date.
The Sponsor will prepay six (6) months of interest payments on this loan as an interest reserve which will be taken out of the gross loan proceeds and 50% will be applied to the Sponsor’s monthly debt service obligations on this loan for the first 12 months. Interest reserve proceeds will be held in trust by a 3rd party Loan Servicing Company. ALL property renovation proceeds from this loan will be held in a separate trust account by a 3rd party Escrow Company to be advanced to the Sponsor upon lender approval. Our team will personally inspect and verify that ALL improvements made to the subject property were adequately performed in a workmanlike manner and in accordance with the project’s approved plan prior to any advancement of renovation proceeds. All improvements MUST comply with the local building codes in the city of Palm Springs prior to the advancement of renovation proceeds by Escrow to the Sponsor. This project is anticipated to take approximately 1 year, from start-to-finish.
The subject property consists of an aesthetically pleasing, well-positioned, twelve (12) unit residential building, on two (2) large contiguous lots within a higher-end residential area surrounded by like property with great neighborhood exposure.
The subject property is located in the city of Palm Springs, County of Riverside, CA on two (2) lots totaling approximately 32,000 square feet of site area. The subject property improvements are comprised of a two-story existing building, approximately 14,500 gross square feet of dwelling area, twelve (12) partially completed residential units with balconies, a lobby area, a pool with hot tub, a large parking lot area, ample storage space, utilities on-site, and community grounds with exceptional luxury-style amenities exuding an overall attractive living environment and conforming to the surrounding properties and uses in the immediate neighborhood. The subject property was originally built in the mid 1960’s and since then several architectural, engineering, and property improvements were started by previous ownership until they ran out of funds, which significantly improved the value of the collateral in addition to the asset being located within a short walking distance from the revitalized historic area of downtown of Palm Springs.
*Cal-Pac conducted a current third-party market rental analysis on the subject property supporting $14,675.00/mo. in gross rental income upon stabilization, which is more than sufficient to support the Sponsor’s monthly debt payment obligation on this loan.*
The Sponsor plans to refinance this renovation loan with a short term bridge loan upon successful completion of the subject property renovation and ascertaining a certificate of occupancy through the City of Palm Springs’ building and safety department.
**The subject property has the added value of an approved and recorded tentative tract map for the development of condominium units, and the final condominium map is in its final steps of approval with the county of Riverside, which will only increase the collateral value upon a successful recordation.**
Guarantors Mid-Credit Rating: 783 and 781
The subject property is located in the heart of Palm Springs, southwest of I-10, south of E. Ramon Road, north of E. Palm Canyon Drive, and just east of the Aqua Caliente Indian Reservation and S. Palm Canyon Drive. The subject property is within close proximity to ALL necessary neighborhood amenities: employment, shopping, restaurants, transportation, entertainment, etc. The subject property is surrounded by several renowned golf courses and country clubs, and it is in close proximity to Palm Springs International Airport.
Note: Cal-Pac Capital Advisors is licensed to conduct business in California only. Money invested through a mortgage broker is not guaranteed to earn any interest or a return and is not insured. State law dictates that we acknowledge that principal and interest on trust deeds is not guaranteed. No investment is completely risk free and past performance is not a guarantee of future results. Before investing, investors must be provided applicable disclosure documents. Mortgage broker fees will apply unless stated otherwise. California Department of Real Estate real estate broker license number 01856406