San Jose, CA

$1,750,000 Interest Only Acquisition Financing with a Built-In Future Advance at 1.15 Debt Service, 90 days Rate Lock.
Rate: 4.75%
Term: 30 years
Amortization: Interest Only for first two years.
DCR: 1.15
LTV: 56%
Prepayment: 3-2-1, Open

Transaction Description

Chessboard Capital, Inc. placed a $1,750,000 senior loan for an 11 units multi-family building in San Jose, CA. The property is well located to be closed to major tech companies. There are rent upsides which the borrower will be able to capitalize through rent increases and possible tenants’ turnovers.

Challenges

The borrower’s goals are to preserve capital while maximizing debt leverage and projected cash flow. The borrower needs a lender who can provide a rate lock for 90 days to accommodate the seller’s 1031 exchange.

Solution

Chessboard Capital focused on the asset and market’s underlying fundamentals, including analyzing the job demands from tech companies and existing low local vacancy which was less than 5%. Chessboard Capital, Inc. further identified and negotiated with a lender who was comfortable to fund an initial loan proceed at 1.15 debt service at closing and agreed to fund additional loan proceeds subject to future rent increases.

The efforts resulted in a flexible loan structure which allowed the borrower to successfully execute the business plan.