I have a client seeking a warehouse line of credit? Is this the most viable mode of financing? If so, where's the best place to look for this type of financing.., Below is the scenario..
Project Description
1st lien, short-term mortgage program to provide interim financing for commercial and residential Texas real estate. This program is suitable for investors whose objective is high monthly income with preservation of capital.
For the last 5 years ---- has filled a niche for Texas real estate investors seeking interim financing for less than $20M. The challenge continuously is to find sufficient investor dollars to match the deal flow. To address this challenge, ---- is seeking a warehouse line of credit of $50M to $200M to be placed over 3-12 months at the rate of $5M - $15M per month. The only use of funds from the line of credit would be to go to a title company to fund various real estate transactions which meet ----’s underwriting criteria for non-owner occupied properties. ---- is happy to provide the investor or provider of the line of credit with copies of all due-diligence packages. The terms of the mortgages which ---- sources range from 6 to 24 months (14 months typical), at interest rates of 10% to 18% per year. Income to ---- would come from the fees associated with closing costs, 6% per closing. The funding source would receive all interest payments generated from each mortgage.
All real estate projects will be in Texas only. This is because the laws in Texas strongly favor the 1st lien holder on non-owner occupied property, allowing him to foreclose in Texas in 60 days.
----’s President, --- ------, has extensive experience in the North Texas real estate market since 1979 and numerous references. ---- receives many opportunities in real estate through its extensive network of real estate investors, but only accepts the good ones. ---- performs a thorough due-diligence package for each property, examples of which are available for inspection prior to investing or establishing a line of credit. ---- is committed to protecting the investor’s money. This commitment along with ----’s knowledge of the DFW marketplace make this 1st-lien mortgage program an excellent fit for the investor who is seeking short investing cycles and high income with preservation of capital. While the recent past reflects more activity in the residential market, changes in that market have shifted the focus toward more commercial development and acquisition projects.
Please advise..
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