Loan Amount: $164,500
Origination Fee: 2%
Interest Rate: 9.0%
Term: 7 years w/ balloon payment due
Amortization Type: Interest Only
Collateral: $235,000 Non-Owner Occupied Duplex located in Wilmington, 1st position loan
ROI = 15.3%
The prospect was in escrow to buy a duplex that was currently generating a gross income through rents of $2,800 a month. Conventional financing fell through when the borrower’s previous tax return showed a one-time write off expense against another unrelated income property that harmed their debt to income ratio. The loan was offered as a back stop solution with an exit strategy related to a new set of the most recent year’s returns showing a higher income. The borrower refinanced into a new loan soon after. Despite the high Loan to Value ratio, a commitment from the borrower was demonstrated by a strong down payment including a premium to the appraised value.