Explore the opportunity to enhance your portfolio with hard equity loans. These loans offer a strategic way to secure financing while providing attractive returns. Ready to dive in? Let’s get started!
When When there is a potential mortgage loan investment deal, Landmark Capital will e-mail every person or entity on its list of interested investors with a description of the offered loan, including the terms of the loan investment and the details regarding the propertysecuring that loan.
The mortgage loans are for no more than sixty percent (60%) loan to value (“LTV”) based on current appraisals ordered and controlled by Landmark Capital (although paid for by the Borrower) and are secured by first mortgages against commercial or investment residential Florida Real Estate (No Homestead properties).
The minimum investment on any particular loan is $50,000. There is no maximum investment amount, but each loan is subject to availability
Each loan is set up as a separate, single-purpose limited liability company (“LLC”). Investors receive a Promissory Note from the single-purpose LLC for the amount of their investment paying a 10% annual interest return on a monthly basis. A Loan Agreement shall be executed between the single-purpose LLC and the investor.
The Loan Agreement shall provide, in addition to investors’ participation in late fees, default interest, etc. (as set forth below), that in the event that the single-purpose LLC forecloses on the collateral property and as a result ends up taking title to the collateral property through foreclosure sale or through a deed in lieu of foreclosure, then, Landmark Capital shall have two (2) years from the date of acquisition to sell the property and from the proceeds of such sale, the investors shall receive 75% and Landmark Capital shall receive the remaining 25%. In the event that Landmark Capital is unable to sell the property in that two-year period, the debt of all the investors in that single-purpose LLC shall be converted to equity in the single-purpose LLC in each investor’s proportionate share of the mortgage loan amount.
Landmark Capital fully manages and services the loans at no extra cost to the investors. The investors get a fixed 10% annual interest on their investment. Any origination points and/or interest charged on the loan above the 10% annual interest is payable to Landmark Capital as compensation for managing and servicing the loan. The 10% annual interest is paid in monthly installments by ACH deposit directly into the investors’ accounts, with the principal due at maturity. If the loan is paid off prior to the first anniversary of the loan, there is a prepayment penalty equal to the balance of the interest due for the entire first year, except in some limited circumstances where we come to an alternative time period with the mortgage borrower.
Additionally, the investors receive 75% of any upside received in connection with the loan, e.g., late fees, default interest (difference between Note Rate and Default Rate), excess proceeds in the event of foreclosure, etc. The other 25% is paid to Landmark Capital as compensation for managing and servicing the loan. The loans are fully serviced and managed by Landmark Capital, thus making this a completely passive, high yield, low risk investment for the investors.
No more than 60% LTV
10% interest annually paid to the investors
Monthly payments of interest only with principal due at maturity
1-3 year terms, with a 2-year term on average
Prepayment penalty equal to the balance of the interest due for the entire first year if loan is paid off prior to the first anniversary of the loan
75% of any upside income/profits payable to investor
Let us walk you through a hypothetical scenario. You are an investor in Landmark Capital’s hard equity loan program. Landmark Capital sends you an email alerting you to a potential mortgage loan investment deal.
What if the borrower wants to pay the loan off early?
You will make your money more quickly!
If the borrower wants to pay off the loan before a year has lapsed, there will be a prepayment penalty equal to the balance of the interest due for the entire first year, in this case, $30,000. In this scenario, the investors receive their remaining interest due for the entire first year in one lump sum immediately following receipt of the loan payoff amount.
What if the borrower is late in paying a monthly interest installment?
You will make additional money!
The borrower is allowed a 10-day grace period, but if after the grace period the borrower has still not paid, the borrower will be charged an additional late fee equal to 5% of the amount they failed to timely pay.
For example, if the borrower here failed to pay a monthly installment of $2,500, there will be a late fee of $125. You, the investor, will receive 75% of this late fee, $93.75, in addition to your regular monthly interest payment. Landmark Capital will receive the remaining 25% of the late fee, $31.25, as compensation for managing and servicing the loan.
What if the borrower defaults on the loan?
You will make additional money!
If the borrower is late and the loan is declared in default, the borrower will need to pay default interest during the time the loan is in default. Landmark Capital’s loan documents provide for the maximum default rate permitted by law. By law, if the loan is $500,000 or less, the maximum default interest rate that can be charged is 18%. If the loan is more than $500,000, the maximum default interest rate that can be charged by law is 25%.
Because this loan is for $1.5 million, more than $500,000, the default interest rate charged if in default would be 25%. So instead of receiving a 10% annual interest on your investment, your $300,000 investment would be charged to the borrower at a 25% annual interest rate during any default period. In this case, you would receive 75% of the difference between the note rate and the default rate, and Landmark Capital would receive the remaining 25% of the difference between the note rate and the default rate as compensation for managing and servicing the loan.
Avoid U.S. taxes on your U.S. investments! If you are a non-U.S. resident investor, you can make a portfolio interest loan and avoid the U.S. taxes on the interest earned. By meeting specific criteria, your investment can qualify as “portfolio interest,” exempting you from U.S. tax.
