Posted by Paul Ramirez on November 07, 2006 at 13:21:26:
Ed,
I apologize I am new at posting and have trouble being articulate with my posting.
The lot size is 2600 sq. ft. and this is what the developer is buying for 1.2 million.
The City is going to pay 220k for the first 10 ft of it from the street to expand it.
The City has notified the 17 other property owners on the Street as well and is also purchasing land from them.
The developer already has a lender approved loan of 800k ready to fund so I beleive they will be in first position.
I am not sure if I should joining the LLC and become a partner and share in the profits on act as a private lender and be paid a percentage for using my money.
If I become a partner I beleive I put myself more at risk? Is this true???
One of the reply poster’s said my best bet would be to come up with a good agreement. Possible a Performance Deed of Trust.
Have you heard of the “Performance deed of Trust” and can you clarify??
Ed ,again I apologize for my inaccuracies…
Your’s as well as others responses to my emails are greatly appreciated.
Question about securing loan - Posted by Paul Ramirez
Posted by Paul Ramirez on November 05, 2006 at 17:59:15:
Question for Ed and all in group.
A developer has aprroached me to invest in his latest 10 unit condo project. He wants to borrow $150,000 to buy the land.
He says I will get my money back in 1-2months time because the city is buying 10 feet off the front of his property to expand the street from 2 to 4 lanes.
I met with a city official and he confirmed that they will pay him $220k once he owns the property.
My question are :
How do I make sure that the city pays me first for my loan
to the developer?
Will I have to pay taxes for just getting my priciple back in a short time?
How much points / interest should I charge for my loan of 150K?
Oh Yes I forgot to mention the developer is scheduled to make 1.5 million once the project is done.
Re: Question about securing loan - Posted by Ed Garcia
Posted by Ed Garcia on November 06, 2006 at 11:10:06:
Paul,
There are several issues here for me.
?Time frame?, I think the time frame the developer is giving is questionable. If the City were to move that fast, they would have already contacted the seller of the subject property and made them the same offer. This being the case, there?s no way the seller would have sold the land for $150,000 when they could get $220,000 just for a few feet of frontage.
You want to shake the monkey out of the tree. Cut a deal with the city and buy the property yourself for $150,000 collect $220,000 and then sell the property to the Developer for the $150,000. I doubt if he would buy it. The reason is residential property is not favorable to 4 lane highways. They prefer less traffic flow. Now you don?t give the description of the size of the property for me to know how far back the property would sit from the highway frontage or if the properties entrance would be from another street.
Re: Question about securing loan - Posted by Max-Va
Posted by Max-Va on November 05, 2006 at 20:16:46:
I would proced like any HML. 6-8 points 12-15% interest Balloon in 6 Months. Draw up note and secure with a 1st position Deed of Trust.
Get an attorney to handle this for you.
Re: Question about securing loan - Posted by Paul Ramirez
Posted by Paul Ramirez on November 07, 2006 at 24:19:51:
Great responses to my Questions, Thanks everyone.
From the responses I received I need to provide more detail on the deal to clear up a few more points and then I hope to get more help from all of you on completing this deal.
The developer has experience by completing 3 other 10 -20 unit condo/apartment projects.
He has put a $10,000 deposit/option to buy on the land.
I have met with the City official and they are going to pay 175K for a piece of the land.
The land is valued at 1.2 million
He already has a lender approved loan of $800K.
He is investing $200K of his money into this project.
The Land Is located in a commercial/ residential area.
The lot size is 26000 sq. ft.
When I fund him the $150k I will become member of the developer’s LLC controlling this property and get a share of the profits.
My main concern what do I need to do be sure of getting my m 150k investment back once the City cuts him a check for the piece of the property they are buying?
Plus for the 150k investment that I am loaning to him what percentage of the profits should I ask for?
Re: Question about securing loan - Posted by Ed Garcia
Posted by Ed Garcia on November 07, 2006 at 08:53:29:
Paul,
I?ve lost confidence in your presentation and information.
You change the information completely from post to post.
In your first post you said quote, ?I met with a city official and he confirmed that they will pay him $220k once he owns the property.?
In your second post you said, ?3. I have met with the City official and they are going to pay 175K for a piece of the land.?
In your second post item number 4, you tell us ?The land is valued at 1.2 million?.
Where is the seller from the moon? The property is valued according to your second post at 1.2 million and your seller is willing to take $150,000?
The city has not notified him along with other property owners on the same side of the street of the highway expansion and yet they?re going to pay your developer the money in 1 or 2 months once he closes the deal according to your first post.
In you second post item #9 you tell us ?When I fund him the $150k I will become member of the developer’s LLC controlling this property and get a share of the profits.? Then further down in that same post you ask us ?Plus for the 150k investment that I am loaning to him what percentage of the profits should I ask for??
It appears to me that the developer is bringing you into the deal because you?re coming up with the money otherwise why would he make you a partner in the deal?
Look Paul, lets keep this simple, all you?ve got to do when you close the deal is have the attorney, title, or escrow depending on which state your in. Put together a note and deed of trust showing you in first position. You now have a lien on the property which the City will have to pay off before taking their portion of the subject property.