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Best Examples of Assisted Living Hard Money Loans

If you’re looking for financing on a senior living property, check out the best examples of assisted living hard money loans we at First Capital Trust Deeds (FCTD) originated over the past few years. In this article, we’ll highlight key loan scenarios where borrowers used FCTD to find short-term private bridge financing to help get where they wanted to be.

Let’s take a look at the different assisted living and senior living hard money loans.

1. Acquisition of Adult Foster Home in Portland, Oregon

Adult Foster Home in Portland Oregon

The manager of an adult foster care facility bought an eight-bedroom, eight-bathroom (8BD, 8BA) residential adult foster home in the Portland area from their current employer. The property was a 1970s split-entry, common in the Pacific Northwest. Their employer had expanded the property from a 4BD, 2.5BA into a larger 8BD, 8BA home to accommodate the adult foster care business.

After managing the foster care business for five years, our borrower had the chance to become the owner. The borrower's loan applications were turned down by a few banks due to being a new operator (the banks wanted two years tax returns) and the seller carryback in second position. (A seller carryback is when the seller of the property holds a loan on the property.) Their best option was to acquire the property using a 36-month hard money first mortgage with the seller carryback in second position.

The 36-month term gave the borrower sufficient time to complete the second fiscal year’s tax returns and submit the refinance application. The hard money loan was paid off 28 months after origination, refinanced into a 5-year fixed-rate loan amortized over 30 years with their bank.

2. Refinance Existing Loan Plus Construction Financing

Assisted Living Refinance Loan

The owner of a California assisted living facility refinanced the purchase money bridge loan and secured construction funds to fully renovate their property. With construction funds, the lender holds funds in reserve until the work is complete. With each construction draw request, lenders will either inspect the site themselves or hire a third party to verify that the work has been completed, matching invoices with materials.

3. Mid-Construction Completion Loan

Hard Money Senior Living Construction Completion Loan

The renovation costs for this California senior living facility was financed out of pocket by the owner. However, construction costs were over budget. The owner wanted a hard money loan to pay off the existing bank bridge loan and have $2 million left to complete the construction and renovation.

FCTD quickly secured a $12.5 million private money loan with $2 million held back for construction, along with a 12-month interest reserve to service the debt.

4. Second Mortgage Construction Loan

Hard Money Second Trust Deed Assisted Living Facility

A Northern California investor wanted a hard money second mortgage to turn their large, single-level three-bedroom property into a seven-bedroom assisted living facility. Second mortgages are always harder to secure than first position hard money loans. Second mortgage construction completion loans can be an even tougher challenge.

Fortunately, FCTD has individual trust deed investors that can fund mid-construction second mortgages. It takes some attention to detail, including a site inspection with the borrower and general contractor —  plus several billable hours for an attorney to review all the critical loan details.

5. Cross-Collateral Blanket Loan

Central Valley Hard Money Bridge Loans

FCTD originated a cross-collateral blanket loan in the Central Valley for an assisted living operator, using two properties as security for one loan. The additional collateral provided extra protective equity, which allowed the borrower to obtain the cash out proceeds for the planned renovation. 

Conclusion

Using a hard money loan to finance an assisted living or senior living facility can be beneficial to the owner in the right situation. Short-term hard money loans can help you acquire, renovate and stabilize properties prior to selling or refinancing into long-term bank financing. If you’re looking for financing, these best examples of assisted living hard money loans should give you a good idea about the possibilities available to you.

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