Mezzanine Construction Loans
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| Rate: 18% - 24% per annum (rate depends upon property type, total loan-to-value, developer's track record, net worth, liquidity and other factors).
Current pay coupon rate: 12% - 13%
Lookback IRR: Balance of Lender's return above coupon is paid at the end of the loan term.
Term: 24 months
Interest reserve: Typically a full 24-month reserve (based on the coupon rate)
Exit fee: 2% - 3% of gross sales prices
Collateral: Pledge of 100% of the LLC interests and personal guarantees
Underwriting factors:
- Amount of Borrower's equity in land or land purchase price relative to current market price
- Quality of Borrower's relevant track record
- Strength of Borrower's net worth and liquidity
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