The need for small second trust deeds under $500,000 continues to increase, especially for business owners, spec home builders and commercial property owners in escrow to sell their assets.  Oftentimes the capital required is for very short periods, as little as three months.  Some guidelines for these loans follow: 

My second trust deed amounts vary between $50,000 and $500,000.  These fixed rates have NO PRE PAY PENALTY but do have minimum interest features--usually half of the term.

Combined Loan to Value 

The combined loan to value I most prefer is 55.000% though will look at solid transactions that exceed that CLTV:  There are many determining factors, including my loan size in relationship to the senior debt, quality of the borrower, loan term, desireability and class of asset.

Rate and Fees

The loan charges are between 1-5 points depending on loan size, rate and closing  parameters.  Administrative and third party vendor fees range between $1000 - $3000 depneding on transaction complexity, size and closing paremeters.  Rate considerations are dictated by the risk perceived as a junior debt, market conditions and opportunity cost.  Typically, my rates are between 11.000% - 15.000%

Areas and Asset Class

Being local is very important and allows for better service.  Counties I focus on are Los Angeles, Orange, Santa Barbara, San Bernardino and Riverside.  Assets that I am most interest in are:

Apartments

Office (classes a-b)

Land

Commercial retail

Car wash/laundrymats/fuel stations

Hospitality/Recreational (golf courses, hotels, amusement parks, arcades)

Board and Care/Senior Living/Covelescent

1-4 Residential (more robust underwriting)

Any real estate asset in escrow

Farms (all counties)