The owner of a beautiful Napa Valley estate seeking a cash-out refinance to raise capital for onsite vineyard management and the development of a mushroom farm was referred to Mark Skolnick of Investment Property Capital after another broker was unable to complete the assignment. There were many challenges, including ‘excess acreage’ and past cash flow and credit issues.
Most institutional lenders and mortgage bankers cannot lend on more than 20-25 acres. This fact narrowed the lending field to agricultural lenders and private investors. However, agricultural lenders are very ‘credit sensitive,’ and most private investors do not like excess land.
At IPC we liked the fact that borrower has subtantial income from another, unrelated business. His overall trajectory is up, and the past credit issues were related to a bitter divorce. The key to success in transactions like this is getting to know the client, understanding his/her personal history, learning how his/her business and cash flow works, and then communicating that in a straight forward manner that is respectful to the client and makes sense to the investor.
We were able to meet the borrower’s objectives in consolidating his debts (which paid off a loan that was soon maturing) while providing him with the capital he needed for his vineyard and farm this planting season.
Loan amount: $2,450,000
LTV: 70%
Term: 3 years