Real Estate Secured Loans
Prudent Capital provides real estate secured loans. We look to provide loans to:
- for sale residential real estate; typically properties that require construction or renovation prior to sale; or
- residential or commercial rental real estate
Target Geography
Primarily in the Greater Washington, DC Metropolitan Area
Target Deal Size
$0.5 million to $5 million per portfolio property
Our Deals
Loan Structure - Typical deal structure:
- Rate - 10%-15% per annum, payable monthly, often from an interest reserve established when loan is made
- Loan amount - generally no more than 65%-75% of the as-completed value
- Term - generally 6-24 months
- Fees - 2%-5% at loan closing plus extension fees
- Recourse - loans will be guaranteed by any affiliated entities and the individual principals involved in the project
- Expense deposit - all loans will require an expense deposit upon the execution of the Term Sheet
- Collateral - generally a first or second deed of trust on the land and improvements and a pledge of the ownership interests of the entity that owns the project; additional collateral may be required to achieve our desired loan-to-value
- Minimum interest - all loans will have a minimum interest period
- Reserves - in addition to an interest reserve, a construction/renovation reserve will be established at loan closing estimated to be sufficient to place the project in ready-for-sale condition
Investment Criteria
- a strong, experienced, and committed development/construction team that has capital invested in the project
- a development/construction team that has a demonstrated track record of success
- a well-located project that has a value consistent with its location and design
- no environmental issues with the project
- a project with proven demand based on recent comparable projects