Loan amount is 38% more than the property purchase price
It’s not often that a borrower receives a loan in excess of the purchase price, but for one California developer, the conditions were just right.
Kennedy Funding, the Englewood Cliffs, New Jersey-based direct private lender announced the closing of a $2.145 million loan to Tanglewood Racquet Village, LLC. Proceeds of the loan will be used to finance the purchase of 17.5 acres of raw land in Linda, California.
According to Kevin Wolfer, CEO of Kennedy Funding, the loan was more than 38% above the property purchase price of $1.5 million, a very uncommon occurrence when it comes to lending on real estate.
“It is a welcome sign when property valuations arrive at values well in excess of the purchase price,” said Wolfer. “Independent appraisers are usually pretty cautious when they value real estate today. This demonstrates that many astute borrowers have reasonable expectations when it comes to their property values. When our team performed its due diligence by hiring a nationally recognized appraisal firm, we found tremendous value and upside potential.
We were confident that we could offer a loan in an amount significantly more than the purchase price. The excess loan proceeds can be used to cover closing costs, fees, and/or other development expenses which may arise.”
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Moreover, for Tanglewood Racquet Village, the valuation returned higher than the purchase price because the property is already zoned and approved for high-density multifamily construction. According to Wolfer, there is access to gas, electric, sewer and water, and the buyers spent significant time obtaining entitlements and conditions of approval. It is effectively a shovel-ready project, which added significantly to the property value.
Located west of Goldfields Parkway at Riverbank Drive, the property is the future home of a 400-unit multifamily development called Tanglewood Racquet Club. The new development will be comprised of one and two-bedroom units across 10 two-story buildings and 10 three-story buildings. Plans for the site include a community center and a storage building.
The future Tanglewood Racquet Club is located immediately behind Yuba College and six miles from Beale Air Force Base, both of which drive the need for housing in Linda. The future development is located near shopping and restaurants, and offers easy access on and off Highway CA-70.
“This development will provide much-needed new housing for singles, couples or new families, especially those affiliated with Yuba College or Beale Air Force Base,” Wolfer said.
Located in scenic northern California, Linda is just south of Marysville, the capital of Yuba County, and just 42 miles from Sacramento. The town is the largest census-designated place in Yuba County after Marysville.