All Forum Posts by: Magnus Wikström

Investors, Lenders

We have a newly built SWFL property waiting to sell for $280k´, with a $172k construction loan. We're looking to start another project in Norway and are therefore looking to borrow $30k, essentially in a second position with the property as collateral, and we further guarantee it personally. We're thinking 9 month term, 3 month extension, 40% APR with bullet payment. No conventional hard money lenders with junk fees, points or anything such, no brokers, just a straight good deal. Are there investors interested?

We're further able to offer a share pledge of the LLC owning the property as further security.

Hi @Parker Schultz

That's interesting in that case. Yeah, we rather pay a good return to the lender for something that works and can be reimplemented, rather than getting a project held up, as mentioned, majorly affecting the IRR.

For the road trip - you could. I'm not sure we'll actually proceed with this project though, as the contractor has become too irresponsive in our current projects, I'll DM you the details.

Hi @Parker Schultz

Mainly because when you finance on a fund on completed work basis, you're not guaranteed you'll receive the agreed money when the work is done, but the lender can pay out whatever they find suitable, and you end up funding the whole deal yourself, paying top dollar for the money and delaying the project. We don't want to work that way again. I'll send you a private message.

@Joshua F. Dropped you a message

Hi all,

We've developed a deal for 3 months, only for the lender to get tired of their own attorney and walk away at the goal line. Everything is ready, including title, permits and security docs.

Here's what's on offer:

Deal

Lot purchase price: $19.500
Construction costs: $192.758
Appraised completed value: $300.000
Construction timeframe: 3-4 months
Location: 33920 Lehigh Acres, FL

Experience: We've built 2 identical houses in the same neighbourhood, completed a combined 8 projects in Europe (we're Swedish), and I have 8 years experience in real estate development finance and am a trained real estate economist (BSc Lund University SWE).

Rough deal structure

Term: 12 months
Extension: 3 months at 2% immeadiate penalty fee + 4% additional APR
Interest rate: 16% APR paid monthly on total loan amount OR 18% APR paid monthly on drawn funds OR 20% APR paid at loan repayment on total loan amount
Loan amount: $211.758
Security: First lien on project + first lien on two additional lots, purchase value $43.000. Funds disbursed as of draw schedule and held in escrow. Personal guarantees
No prepayment penalty

Draw schedule

Draw 1: lot + pt. 1 soft costs --> $25.500 - At closing, reimbursement for costs incurred
Draw 2: pt. 2 soft costs + slab + exterior framing --> $39.564 - At closing, can be paid directly to contractor if preferred
Draw 3: interior framing + roof --> $45.564 - After completion of Draw 2 items, can be paid directly to contractor
Draw 4: septic + painting + flooring --> $55.564 - After completion of Draw 3 items, can be paid directly to contractor
Draw 5: sod + driveway + completed interior --> $45.564 - After completion of Draw 4 items, can be paid directly to contractor. Simultaneous release of additional lot liens

We're experienced business people, my business partner with 3 exits through company sale out of 5 businesses started, and I'm trained in real estate investment at University of Oxford UK, and Private Equity at Imperial College UK. We're flexible but want to create something that feels attractive for us and the lender, and are happy to pay for it, as long as it fits us structurally. Our liquidity position is about $250.000, net assets +$1M.

In this structure, we have about $70.000 invested in the deal. At the time of the release of the additional lot liens, the estimated project value is roughly $200.000.

If an interest, please message me. And no brokers please or traditional hard money lenders without flexibility. Happy to provide more information on request. We have ALL documentation available, as the project is ready to go.

I can tell you, any serious borrower counts the ROE and IRR, and definitely utilizes leverage to maximise those numbers.

Hi @Jennifer Kim,

4 years is quite a term for only 3 homes... What's delaying it so much?

4 years sounds very long for not that many townhomes... But if you're not sitting on better opportunities and want to remain completely passive, I understand you're considering it.

HI @Carrie Kerley,

I'm assuming you only lend on properties in Missouri?

If you're lending on reimbursement basis, and charge good for it with an experienced borrower, you're pretty derisked still.