Line of Credit for un-entitled Residential Land
Financial Compound was approached by a new prospective client seeking a Line of Credit to fund land purchases in Southern California. After carefully reviewing their unique needs and requirements, Financial Compound was able to successfully negotiate and secure a credit facility to fund deposits and entitlement costs for land purchases in Southern California.
During the escrow period, the borrower typically secures entitlements and flips the contract to a home-builder after adding value. The lender, with whom Financial Compound has a strong relationship and track record of success, was able to offer this Land Line of Credit for un-entitled residential land to a new client by securing the lien with a personal guarantee as well as encumber another undeveloped land site owned by the borrower, allowing the lender to offer competitive interest rate and terms that met the borrower’s needs. Our client was able to borrow funds for escrow deposits and entitlement costs during the escrow period, and re-sell or flip the contract to a home-builder without taking title to the acreage.
Un-ending Line of Credit
The interest rate is floating at Prime + 1.5%, interest only, with interest charged only on the outstanding balance each month. The lender charged a 1% lender fee, and there was no prepayment penalty. It is for a 2 year term with no cleanup provision, so that the line can be drawn and paid down as many times as desired over its term, making it suitable for commercial developers looking for short-term financing solutions. Most credit lines require the borrower to pay the loan down to zero for 1 day each year, appropriate referred to as a ‘revolving line of credit’.
In this case, due to the characteristics of the transaction and the collateral and support structured by commercial mortgage broker Finanical Compound, the borrower is able to keep funds oustading for the entire loan term. This releiving day to day pressue that our client would otherwise be subjected to.
Commercial mortgage broker Financial Compound likes to call this loan structure an “un-ending line of credit”. This loan structure, a product designed an engineering by Financial Compound, enabled our client to move forward and open escrows on multiple unentitled residential land purchases quickly and efficiently without any obstacles or delays.
Commercial mortgage broker Financial Compound, with a proven track record of structuring complex yet elegant loan terms, has become one of the most trusted names in commercial mortgage brokerage. How can we be of service to your commercial real estate projects? In today’s competitive real estate environment, having flexible access to capital is critical for success. Land developers, especially those operating in fast-moving markets like Southern California, must think creatively in order to allocate their capital most efficiently.
A dedicated line of credit structured for residential land purchases provides the agility and financial strength needed to close transactions with confidence. At Financial Compound, we recognize that every borrower’s situation is unique. That is why we customize each financing solution to align with the client’s development strategy, timing needs, and risk profile. Whether securing land for entitlement, future ground-up construction, or flipping contracts for profit, our financing structures are designed to maximize leverage while maintaining strong underwriting standards acceptable to lenders.