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MBohena
263 Posts |
 Posted - 07/07/2009 : 3:29:49 PM
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I am not ashamed to admit when I am stumped I have a client that is in desperate need of a bridge loan. They purchase some land back in 2007 and slated it for residential development. As we all know the funding for residential development has dried up. The borrower is now in default .
Loan amount $800k
Appraised value $ 1,200,000.00
LTV As is 67%
ACV 17%
Suggestions? Hard money lender? JV?? Private money?
Thanks for your suggestions!
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findingfunding
228 Posts |
Posted - 07/07/2009 : 3:44:33 PM
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| Does he have anything to cross-collateralize? Land loans now running 30-40% LTV when you can find one. This deal does not look like a money maker for you. |
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Money4u
1756 Posts |
Posted - 07/07/2009 : 4:18:46 PM
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I am less optomistic than Bob.
The few deals I am looking seriously at, are in the 10-20% range. If you go back into the WSJ 18 months ago, as well as California Local Television, you'll find articles on CALIFORNIA LAND, WITH NO VALUE. True, sadly. Many Parcels, if you took the MArket Value of a new home, reduced the SAles Price by all the Construction and Sales costs, and then by the Cost of Improving the lot, and factored in Interest, Points, Fees, Holding, Taxes and on and On...
The Land Value was( and is) ZERO.
I wrote about this then, and here I am again. Anyone making Land loans above 20% is Probably an Idiot and/or, not using their own money. For additional reference, check the Stock Prices for Toll Brothers, Pulte..etc for the past 48 months. While they have come back some, they were down ( using Toll, 85% from it's high in 05"). Whatever, it is reflected in their Stock prices as their land, Nationwide, plummeted in value, in some cases, approximating zero.
Stockton/Sacramento/Bakersfield/Fresno. HELL on Earth, for Land.
If you can find someone Financing land, today, above 20% on Fair Market Value, you can probably RESELL that money. Just, not to your current Client.
I personally know at least a dozen Builders and Developers that are no longer in Business, at least, using their old business models. The Builders are in somewhat better shape, once they got rid of the inventory, assuming they have resources, sooner or later, someone will either hire them to run a project/Start their own/Complete some homes for a Bank, whatever. Land Holders, are in a world of hurt, unless...they own it Freee and Clear.
I was turning down 2-3 requests for Subdivison Financing, per WEEK, for over a year.
Things have slowed down. The MArket is not up, people just do not waste their time calling me ( a few do, ...a few) with 40-6-70% LTV Land Loans.
Some land holders, a few, are ok, with little or no debt. Most are just praying, they do not need to sell, to pay the bills.
There are many properties, In California today, where there is little or, sometimes, NO, ZERO/Null Value that can be attribued to the Land.
Do the math, then, find another Client.
Good luck. |
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