How Private Money is Reshaping Commercial Real Estate Financing
Explore how private money is transforming commercial real estate financing in our blog ‘How Private Money is Reshaping Commercial Real Estate Financing’.
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$725,000 Reverse 1031 Exchange Loan in San Jose, CA
Loan Amount: $725,000
Loan Term: 6 Months
CLTC: 40%
Loan Position: First Position Deed of Trust
Navigating a Reverse 1031 Exchange: A Success Story
Recently, we successfully facilitated a Reverse 1031 Exchange, an intricate type of transaction that not many lenders are equipped or comfortable handling. This blog will take you through the details of the deal and explain how a Reverse 1031 Exchange works, along with why it’s a valuable tool for savvy investors.
What is a Reverse 1031 Exchange?
A Reverse 1031 Exchange, flips the traditional process. Instead of selling an existing property first and purchasing the new one later, the buyer purchases the new property before selling the original one. This allows investors to secure a new property when they find a good deal, without having to rush the sale of their existing asset. However, the complexity of a reverse exchange lies in the fact that, during this time, an intermediary must take title to one of the properties, which can be a sticking point for most lenders.
A Reverse 1031 Exchange, flips the traditional process. Instead of selling an existing property first and purchasing the new one later, the buyer purchases the new property before selling the original one. This allows investors to secure a new property when they find a good deal, without having to rush the sale of their existing asset. However, the complexity of a reverse exchange lies in the fact that, during this time, an intermediary must take title to one of the properties, which can be a sticking point for most lenders.
Why Choose a Reverse 1031 Exchange?
A Reverse 1031 Exchange is an excellent strategy for investors who want to purchase a new property before selling their existing one. It offers several advantages:
A Reverse 1031 Exchange is an excellent strategy for investors who want to purchase a new property before selling their existing one. It offers several advantages:
- Securing an Investment: In a competitive real estate market, waiting to sell your existing property before purchasing a new one can result in missed opportunities. A Reverse Exchange allows you to secure a new property right away.
- Tax Deferral: By deferring capital gains taxes, investors can reinvest all proceeds into the new property, maximizing their purchasing power and potential return on investment.
- Market Timing: Investors can take advantage of market conditions, acquiring a property when prices are favorable, without rushing the sale of their current property.
- Flexibility: The Reverse Exchange provides flexibility by allowing investors time to make upgrades or improvements to the newly acquired property before placing it on the market for lease or sale.
The Challenge
In this particular case, our client was looking to secure a new home but had not yet sold their existing property. The home they purchased was vacant and required some upgrades before they could lease it to a third-party tenant. Their existing property, located in San Jose, was also leased at the time. The situation presented multiple challenges: they needed to acquire the new property without having the funds from the sale of their current property, and they needed a lender who was familiar with a Reverse 1031 Exchange.
Many lenders shy away from these types of transactions due to the intermediary taking title to one of the properties. This added complexity requires a deep understanding of the tax code, as well as a lender who is flexible and experienced enough to manage the legal and financial intricacies.
Rubicon Mortgage Fund Steps In
Rubicon Mortgage Fund was able to step in where others hesitated. Our team is experienced with Reverse 1031 Exchanges, and we worked closely with the client and their financial advisors to structure a loan that allowed them to secure the new property before their existing home was sold. Our willingness to work with the intermediary that held the title to the new property provided the client with a smooth transaction process.
With the funds secured, the client was able to close on the new property and begin making the necessary upgrades to prepare it for leasing. This proactive approach allowed them to capitalize on the opportunity, without the pressure of rushing to sell their San Jose property.
Client Success and Feedback
The success of this Reverse 1031 Exchange highlights the flexibility and expertise that Rubicon Mortgage Fund brings to the table. By working with us, our client was able to achieve their investment goals with ease. In the client’s own words, it was “a beautiful process.”
They now have the new property ready for lease, while their San Jose property continues to generate rental income. This Reverse Exchange helped them unlock future revenue streams without the risk of losing out on a new opportunity.
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$11,000,000 Refinance Loan in Pleasanton, CA
Loan Amount: $11,000,000
Loan Term: 12 Months
CLTV: 50%
Loan Position: First Position Deed of Trust
Rubicon Mortgage Fund Secures $11 Million Refinance Deal in Pleasanton, CA
In today’s challenging commercial real estate landscape, Rubicon Mortgage Fund continues to demonstrate its ability to provide innovative financing solutions where traditional lenders fall short. We are thrilled to announce the successful completion of an $11 million refinance deal in Pleasanton, California, showcasing our commitment to serving clients with complex needs and our expertise in navigating the current market conditions.
Deal Overview
This recent refinance deal in Pleasanton, California, exemplifies Rubicon Mortgage Fund’s capacity to structure complex transactions that meet borrower needs while maintaining a prudent risk profile. The $11 million loan was secured for a 104,000-square-foot Class B office building at 50% occupancy. The borrowers, two brothers with substantial real estate holdings, approached us with a time-sensitive need: a $13 million loan due on the property.
Given the current instability in the office market, traditional lenders were hesitant to provide refinancing. This is where Rubicon Mortgage Fund’s flexibility and innovative approach came into play. We recognized the borrowers’ strength and the property’s potential, allowing us to craft a solution that addressed both the immediate refinancing need and the investment’s long-term viability.
The Borrowers: A Profile of Strength
At the heart of this deal are two brothers with a proven track record in real estate investment. Their portfolio demonstrates not only their expertise but also their financial strength. With substantial real estate holdings, these deep and strong borrowers bring a wealth of market knowledge and experience. Their high liquidity provides additional security to the loan, and their willingness to offer a personal guarantee underscores their commitment and confidence in the investment.
Rubicon’s Solution: A Multi-Faceted Approach
To meet the borrowers’ needs and mitigate risks, we structured a comprehensive financing package:
1. Primary Collateral: 104,000 SF Class B office building in Pleasanton, CA (currently 50% occupied); the lot is 7 acres of prime commercial property.
2. Additional Collateral: A 23,000 SF Multi-tenant industrial building in Burlingame was recently purchased for $11 million in cash. An additional $1 million in recent renovations and improvements were also put into the property.
3. Cash Contribution: Borrowers contributed an additional $2.4 million to the closing.
4. Personal Guarantee: The borrowers’ high net worth adds a layer of security and their personal belief in the deal.
5. Option for sale: The subject property in Pleasanton is currently optioned for redevelopment play for an amount well in excess to our loan.
The primary collateral is the 104,000-square-foot Class B office building in Pleasanton, CA. To strengthen the deal, we incorporated additional collateral in the form of a 23,000 SF multi-tenant industrial building valued at $11 million, with a further $1 million recently invested in renovations and improvements. This subject property, situated on 7 acres in a prime location, houses 27 tenants, providing a diverse and stable income stream.
Further enhancing the loan’s security, the borrowers contributed an additional $2.4 million in cash. The personal guarantee provided by the borrowers, backed by their high net worth, adds an extra layer of assurance to the transaction.
Critical Factors in Loan Approval
Several elements contributed to our confidence in this deal. The brothers’ extensive real estate experience and substantial holdings demonstrate their market understanding. Including the multi-tenant industrial building helps offset risks associated with the office property, while the prime locations of both properties enhance their long-term value proposition. Additionally, the office building is optioned with a local developer at a value significantly higher than our debt, indicating solid prospects.
Navigating Challenges, Delivering Solutions
This $11 million refinance deal exemplifies Rubicon Mortgage Fund’s ability to structure complex transactions that meet borrower needs while maintaining a prudent risk profile. In an era where traditional lenders are increasingly constrained, our flexible approach and deep understanding of the market allow us to step in and provide vital financing solutions.
For real estate investors facing similar challenges or seeking creative financing options, Rubicon Mortgage Fund stands ready to help. Our team of experts can craft tailored solutions that address your unique needs and market conditions.
Contact Rubicon Mortgage Fund today to explore how we can support your next real estate investment or refinancing project. Let us demonstrate how our innovative approach to lending can help you achieve your real estate investment goals, even in challenging market conditions.
The image featured above is the additional collateral industrial building in Burlingame, CA
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$2,400,000 Multifamily Real Estate Loan in San Diego, CA
Loan Amount: $2,400,000
Loan Term: 12 Months
LTC: 60%
Loan Position: First Position Deed of Trust
Unlocking Opportunities: How Rubicon Mortgage Fund Empowered a San Diego Acquisition
In the ever-evolving world of real estate investments, navigating the challenges of Value-add properties can be a daunting task. But for Rubicon Mortgage Fund, providing creative financing solutions is at the heart of our mission. Recently, the team at Rubicon had the opportunity to showcase their expertise by supporting a thrilling multifamily real estate acquisition in the vibrant community of Point Loma, San Diego.
The property in question is a multifamily real estate asset consisting of three separate buildings – two 4-unit buildings and one 2-unit building, totaling 10 units. Situated in close proximity to a local college, this acquisition presented a unique opportunity for the savvy borrower, a seasoned Commercial Real Estate Broker.
Why Private? Six of the 10 units were vacant, making traditional lenders hesitant to engage. Typical lenders often focus solely on the property’s current cash flow, a metric that fell short in this case. However, Rubicon Mortgage Fund recognized the inherent value of the asset and the borrower’s expertise, adopting a more holistic approach to evaluate the deal.
“At Rubicon, we understand that multifamily real estate investment is not a one-size-fits-all endeavor,” explains the Rubicon Mortgage Fund team. “By looking beyond the immediate cash flow and considering the overall asset value, we were able to provide the necessary financing to bring this acquisition to fruition.”
The $2.4 million loan, structured by Rubicon, empowered the borrower to move forward with their strategic plan. With a deep understanding of the local market, the borrower intends to undertake a comprehensive renovation of the vacant units, transforming them into vibrant, modern living spaces.
Beyond the immediate renovation plans, the property also offers an intriguing future prospect – the possibility of adding Accessory Dwelling Units (ADUs) to the site. This unique feature adds another layer of value and potential to the multifamily real estate investment, further solidifying the borrower’s long-term vision.
Once the renovations are complete and the units are stabilized, the borrower plans to refinance the property with a traditional lender, unlocking the next chapter of this journey. Rubicon’s expertise in providing bridge financing has proven invaluable, enabling the borrower to seize this opportunity and set the stage for long-term success.
Rubicon Mortgage Fund’s expertise extends beyond Northern California, as they continue to fund projects along the beautiful coast of California.
“At Rubicon, we take pride in our ability to identify and support unique real estate investments that might not fit the mold of traditional lenders,” the Rubicon Mortgage Fund team affirmed. “By understanding the nuances of each project and the vision of our borrowers, we can unlock a world of possibilities and drive meaningful outcomes.”
Rubicon Mortgage Fund remains steadfast in its commitment to empowering investors and unlocking the full potential of their real estate endeavors. This successful collaboration serves as a testament to the power of creative financing and the transformative impact it can have on the lives of investors and the communities they serve.
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$6,000,000 Commercial Real Estate Loan in Oakland, CA
Loan Amount: $6,000,000
Loan Term: 12 Months
CLTV: Under 50%
Loan Position: First Position Deed of Trust
$6 Million Commercial Real Estate Loan Funded for a Major Non-Profit in Northern California
Rubicon Mortgage Fund recently closed a $6 million commercial real estate loan for a leading non-profit organization in Northern California. Structured for consolidation purposes, this loan utilized a combined loan-to-value approach and featured a cross-collateralization strategy. By leveraging multiple properties, this innovative financing solution allowed the non-profit to access substantial capital while optimizing their real estate assets. The borrower plans to exit the loan through the sale of their Oakland headquarters, showcasing Rubicon’s expertise in creating flexible and tailored financing solutions for non-profit entities.
Secured by Two Properties:
Primary Collateral: Industrial
35,000 SF industrial building
Approximately 3 acres of land
Additional Collateral: Mixed-use Property, San Mateo, CA
8,600 SF retail/industrial building
0.56 acres of land
At Rubicon Mortgage Fund, we pride ourselves on looking beyond traditional lending parameters. This transaction exemplifies our innovative approach to commercial real estate loans, especially in the non-profit sector
The image above is additional collateral located in San Mateo, California
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