Four properties cross-collateralized in Woodside, CA. While Yieldi typically does not lend in California, this opportunity was to good to pass up with a 30% loan to value ratio.
- Tax Document
- Offering Structure
SENIOR BPDN - PROMISSORY NOTE SECURED BY COLLATERAL SECURITY AGREEMENTTHIS PROMISSORY NOTE IS SECURED BY THE ISSUER'S PLEDGE OF THE RELEVANT UNDERLYING COLLATERAL LOAN (AS DEFINED BELOW) TO THE LENDER (AS DEFINED BELOW) UNDER THE COLLATERAL SECURITY AGREEMENT AND PROMISSORY NOTE. HOWEVER, EXCEPT TO THE LIMITED EXTENT PROVIDED IN THE PROMISSORY NOTE WITH RESPECT TO THE UNDERLYING COLLATERAL LOAN, THIS NOTE IS NON-RECOURSE TO THE ASSETS, FUNDS AND ACCOUNTS OF YIELDI, LLC (THE "BORROWER", "COMPANY" OR "ISSUER") OR ANY OF ITS AFFILIATES, EMPLOYEES, AGENTS, STOCKHOLDERS, PARENTS, OR SUBSIDIARIES EXCEPT TO THE EXTENT OF THE VALUE OF COLLATERAL LOAN NET PAYMENTS ACTUALLY RECEIVED IN RESPECT OF THE UNDERLYING BORROWER LOAN.
Example Return on Investment
Why We Like This Opportunity
Four properties cross-collateralized in Woodside, CA. While Yieldi typically does not lend in California, this opportunity was to good to pass up with a 30% loan to value ratio. The borrower is purchasing 234 Albion Ave., Woodside, CA at a $15.5mm purchase price and putting down roughly 50% cash. We are cross-collateralizing 153 Marva Oaks Dr., Woodside, CA; 13567 Lowrey Rd, Red Bluff, CA 96080; and 631 Folsom St., Apt. 17F, San Francisco, CA 94107. These three properties are all owned free and clear by the borrower and are worth approximately an additional $15mm. The loan amount will be $8.5mm at an approximate LTV of 30%. The borrower’s exit strategy is to sell the Marva Oak property, which is currently listed for sale, and pay us off.
About the Borrower
The borrower is a general partner of Rsquared Ventures, the VC firm that Andrew Chang works at. He’s owned a commercial construction company, JD Berglund Group (dba The Supply Closet, dba Armour Fence) for 14 years and a government contracting company, Fusion Logistics, for a few years. He has built and sold a couple of other small businesses which allowed him to buy his portfolio of properties all cash. Credit score is 750.
SeniorityThe first-priority mortgage lien position is the most senior and highest priority within the capital structure. In the event that a borrower defaults, the lien priority determines the order in which lenders are repaid. Senior lenders are always repaid first. All subordinated positions, including the amount held by the Originator and its investor syndicate, act as a buffer in the event of a deterioration in the Properties’ value.
Personal GuaranteeThe Loans are personally guaranteed by the borrower, spouse, and all principals in the LLC. Additionally, the Sponsor and/or Guarantor are obligated to contribute monthly payments to maintain a tax and insurance reserve. Failure to adhere to reserve contribution requirements would lead to the triggering of a debt service and operating expense/shortfall guarantee.
What Should I Consider?
Borrower RiskThe Borrower may not have represented itself accurately. Risk Mitigation
- The Originator checks the Borrower's credit history via a third-party credit reporting company. The Borrower has a 700 credit score.
- The Originator considers the underlying asset to be the primary source of security.
- If the Loans are not fully repaid after the Lender has exhausted other sources of repayment, the Borrower has provided a personal guaranty to fulfill any deficiency.
Default RiskThe Borrower may default on his financial obligations. Risk Mitigation
- If the Loans are not fully repaid after the Lender has exhausted other sources of repayment, the Sponsor has provided a personal guaranty to fulfill any deficiency.
- In the event of a default, a direction letter signed at closing by the Borrower will be sent redirecting the Tenant to make rent payments into an account controlled by the Originator.
Investors have an opportunity to invest in borrower payment dependent notes, the cash flow of which is dependent on the payment of interest and principal repayment on the Loans. Investors are scheduled to receive an annualized monthly interest payment of over the Loans' estimated remaining term of 12 Months. Principal is expected to be returned on or before maturity through a refinancing with a traditional bank loan. It is important to note that the Loans are eligible for prepayment, and principal may be repaid prior to the 12 Months estimated remaining term. If the Loans are paid off before maturity, investors are expected to receive at least three months of interest payments in addition to return of principal.
How Do I Get Paid?
This loan had an initial term of 12 Months with an option at Yieldi's discretion to extend. As of June 15, 2023 there are 12 Months remaining. Investors will immediately receive monthly interest payments at an annualized rate of on the principal balance over the life of the loan. If you invest in this loan in the middle of a month, you will receive a prorated interest payment for your investment for your first investment month and then full monthly payments thereafter. All payments are made automatically via ACH on the 1st of each month and investors all paid by the 10th of the month.
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