| Author |
Previous Topic | Next Topic |
|
JCMillerMortgage
17 Posts |
 Posted - 07/09/2008 : 12:15:50 AM
|
Greetings fellow Outposters...
I am a hard money guy in Arizona and have a client who is a very experienced developer and is seeking to pull $5M out of a 2750 acre, $30M property (17% LTV, currently owned free and clear) to begin development.
The property is located in West Phoenix (near Buckeye), Arizona and the developers already have a final plat approval for a master-planned community.
I am looking for 9% with 3 points or better if at all possible (that is what they supposedly already have an LOI for from another lender). I have another source that is willing to finance at 9-10% with 5 points. The borrower is also seeking a loan term of 2 years w/ no pre-payment penalty after 6 months.
Contact me for more information. |
|
KHufford
5316 Posts |
Posted - 07/09/2008 : 12:30:28 AM
|
Welcome to BO, I am in AZ also..
The exit strategy is a master planned residential community in Buckeye? They wont have funding for any homes or development for a long while...so there is no real exit that is viable.
If so:
1. What is current "as is" fire sale value?
2. They are lying about that LOI or its complete garbage. If it was legit they would have jumped on it like a dog on a steak and never looked back.
3. If it does turn out to be legit or you find a lender that does fund residential land, please tell me who did it!
These are near impossible, if I read you wrong and its not residential land, disregard what I said and I may be able to help you myself.
Good luck.
|
|
|
JCMillerMortgage
17 Posts |
Posted - 07/09/2008 : 12:50:49 AM
|
It might help to give you a little better idea of value if I mention that the developers had purchased the property in 2005 for $26M. All other estimates of value are based off of their estimates however. I believe they also estimate the property to be worth $200M after all infrastructure and improvements have been done.
I understand how you feel about their other LOI of 9% @ 3 points... That was kind of my initial reaction also. I am not completely positive why they are still shopping for financing instead of taking the offer, but as far as I know, they still are.
The last thing I might want to mention is that the borrowers are about as strong as they come. There are 3 total and I know one of them is the former President of one of the largest home builders in the country and one of the other guys is basically a Las Vegas Real Estate Tycoon.
BOTTOM LINE is that this is a very large parcel in a great area (not in the middle of nowhere) with great developers. I know things have fallen off quite a bit since 2005, but I am sure this property is still worth quite a bit more than $5M... even at fire sale prices.
|
|
|
KHufford
5316 Posts |
Posted - 07/09/2008 : 01:12:51 AM
|
If they bought for 25MM in 2005, its now worth maybe 15MM.
Fire sale value = 11MM
45%LTV of fire sale maybe workable at 5.5MM max loan amount.
However, and seriosly take this to heart please, it makes no difference who they are, Donald Trump cant even get financed these days. It doesnt hurt if they are experienced, but it wont make it any more lucrative for an investor, given the fact that there is no exit.
There are MAJOR developers all over Scottsdale even (most desireable area in AZ) that and stuck with land they cannot or will not build on now due to the market for residentail developments. There is a half build condo tower right next the very desireable Chandler Fashion Center, been sittign unfinished for years now...no buyers.
Sorry to be so negative but I am trying to save you time before you waste 2 months on this.
Even if they could get this loan, there is NO way they could get financing for development to have anything build to sell yet and payback the 5MM, thats why even at that low ltv it wont get funded right now, even for experiened developers.
Hard money wont touch these either, they are losing money hand over fist on all their outstanding land loans that people cant exit from (refinance or build) and pay them back right now.
They need to hold on to it for a few more years I think..
There will likely be people on here saying they can do the deal, but I would not count on it. If it can be zoned and planned for multifamily or commericial their chances increase 10 fold, but sounds like thats not in the cards.
If you need help on any AZ deals feel free to contact me anytime, I work for Nova also, which is based in your area obviously..
|
|
|
JCMillerMortgage
17 Posts |
Posted - 07/09/2008 : 01:28:28 AM
|
Thanks for your input Kyle. I really do appreciate it (especially for it being 1am...).
I do agree with you and I guess to some extent I just thought I would throw it out there and see what kind of responses I get. This is my first time posting on BO so I figured I would try it out. I am pretty impressed. Any other forums you would recommend that might be more commercial / hard money oriented?
I will keep you in mind for additional deals. One of my main niches is for condo and hotel projects in Mexico (as well as other International areas; Let me know if you might be interested.), but I also seem to be coming across quite a few commercial projects, multi-family, and even distressed condo projects that would be excellent to convert back to apartments here in AZ. |
|
|
lenderben
1041 Posts |
Posted - 07/09/2008 : 06:23:58 AM
|
I agree with my learned colleagues. Even if my boss gets comfortable with the borrower and agrees to move forward the total yield on land in AZ will be around 21% (interest and points combined), nowhere near 9% and 3 points.
|
|
|
gcaron05
241 Posts |
Posted - 07/09/2008 : 07:23:39 AM
|
quote:
Originally posted by JCMillerMortgage
Greetings fellow Outposters...
I am a hard money guy in Arizona and have a client who is a very experienced developer and is seeking to pull $5M out of a 2750 acre, $30M property (17% LTV, currently owned free and clear) to begin development.
The property is located in West Phoenix (near Buckeye), Arizona and the developers already have a final plat approval for a master-planned community.
I am looking for 9% with 3 points or better if at all possible (that is what they supposedly already have an LOI for from another lender). I have another source that is willing to finance at 9-10% with 5 points. The borrower is also seeking a loan term of 2 years w/ no pre-payment penalty after 6 months.
Contact me for more information.
I'd like to look at this one, we may be able to do something. Email sent. |
|
|
KHufford
5316 Posts |
Posted - 07/09/2008 : 11:52:07 AM
|
quote:
Originally posted by JCMillerMortgage
Thanks for your input Kyle. I really do appreciate it (especially for it being 1am...).
I do agree with you and I guess to some extent I just thought I would throw it out there and see what kind of responses I get. This is my first time posting on BO so I figured I would try it out. I am pretty impressed. Any other forums you would recommend that might be more commercial / hard money oriented?
I will keep you in mind for additional deals. One of my main niches is for condo and hotel projects in Mexico (as well as other International areas; Let me know if you might be interested.), but I also seem to be coming across quite a few commercial projects, multi-family, and even distressed condo projects that would be excellent to convert back to apartments here in AZ.
We LOVE apartment rehabs...if you have any of those we have great programs for them.
Also, through Nova, we do Mexico residentail financing, and development financing, residentail component only.
Good luck
|
|
|
EMScommercial
4751 Posts |
Posted - 07/09/2008 : 11:54:51 AM
|
Joshua.... welcome online....
Unless there are two exact scenarios from Buckeye.... we already have that deal in the works here from another broker.....
I will say, if you have the clients' documentation, you are surely closer to them than the source that is trying to send it through us.....
If you'd like we can discuss....
Either way.... have a nice day.... |
|
|
KHufford
5316 Posts |
Posted - 07/09/2008 : 12:05:31 PM
|
quote:
Originally posted by Boner in Sweatpants
Since this would be my first commercial or hard money transaction and I might make a rookie mistake or two, I would be willing to do this transaction for only two points.
Email me the details and I will show them to my boss.
You starting are to be a complete idiot.
|
|
|
ty__coon
36 Posts |
Posted - 07/09/2008 : 12:32:38 PM
|
This deal sounds familiar to me. Only because it is Buckeye and the prinicipals sound strikingly like a deal I have heard being shopped for a while.
The exit strategy is the bigger issue. Not to mention that the appetite for lending to developers is low at the moment.
I have a call into a freind that does a lot of stuff like this. See what he has to say.
|
|
|
Quicksilver
4478 Posts |
Posted - 07/09/2008 : 12:55:31 PM
|
| Did they not show you the other? If not, bs....I don't know anyone willing to take that risk for those terms on land for development. If they won't supply the other loi, you know their jerking you around, that or its pry some bs broker drawn loi that as good as a paperweight. |
|
|
| |
Previous Topic | Next Topic |
|
Search for: 
