Real Estate Investors

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Down Payment Assistance Program

Please find below information about the Down Payment Assistance Program for experienced real estate investors.

The Down Payment Assistance Program (hereafter referred to as DPAP), provided by Promise Land Capital Corporation (hereafter referred to as PLCC) offers short-term, alternative down payment(gap) funding assistance to experienced Real Estate Investors Professionals (REI Pros) who need to close a real estate purchase, but lack the cash for all of the costs involved, etc.

NOTE: DPAP funding works best with seller carryback, subject to or similar private funding sources. It tends to NOT usually work well with hard money lenders since they frown upon allowing second position promissory notes to be recorded against any property on which they hold a first position loan.

Features & Benefits

A. Our profit comes from the seller of the property.

B. Do not require any out-of-pocket origination fees from the REI Pro.

C. We provide down payment/gap funding nationwide.

Explanation | Details

A. We fund deals where:

1.The property acquisition includes at least 10% equity position when it is first acquired; that is to say, The REI Pro was able to buy the property for 90% (or less) of the current appraised Fair Market Value (FMV).

2. The REI Pro is able to buy the property for 70% or less of the After Repair Value (ARV).

B. Joint Venture details:

1. The PLCC Program is NOT a loan.

2. It functions as a Joint Venture (equity) Partnership (JVP), starting with the acquisition, through to then end.

3. We form a Joint Venture Agreement (JVA) with the REI Pro’s business entity (LLC or Corp.) and PLCC’s LLC.

C. When the property is initially acquired (once escrow has closed with the seller):

1. The JVA is dissolved.

2. PLCC leaves with a 6-month, business-to-business, 2nd position, non-recourse, promissory note with no prepayment penalty that includes 10% equity from the seller + the funding amount that PLCC provided + 14% simple annual interest. Simply put, we monetize the (JV) equity into a commercial note (debt).

D. REI Pro’s responsibilities include:

1. Provide a brief, monthly rehab progress report, to the holder of the promissory note, summarizing the

work completed to date towards completion of the cosmetic fixup.

2. Put up 3% “skin-in-the-game” money (of the purchase price) that includes the following:

a. 1% or so to cover closing-related expenses related to the DPAP funding: escrow, title, transfer fees and doc prep by a Professional Document Preparer or PDP (the result being a full and complete package that meets all the requirements of PLCC prior to the opening of escrow with the closing agent). 

FYI: PLCC has preferred service provider that we will designate, including the closing agent, title company and PDP.

b. 2% devoted to a modest interest payment reserve held onto by the REI Pro, and paid out monthly to the note holder. FYI: Please note that the real amount of interest the REI Pro will eventually owe after six months is actually 7%, not 2%. For example, if the actual amount of monthly interest is say, $2,400

(or $14,400 after six months) the REI Pro is only required to show (at closing) that they have $4,800 set aside as a modest interest payment reserve. Then, once a month, they send $800 (from the set aside reserve) to the note holder, for six months. Fast forward six months, and the balance due in this case would equal $9,600 ($14,400-$4,800), which gets paid when the property is sold or refinanced.

3. The REI Pro must have previously and successfully completed three or more real estate deals. For those who have NOT successfully finished three deals on their own, we strongly suggest that they partner up with a mentor (who HAS the prerequisite experience…three or more completed deals). They can, for example, form a joint venture partnership where both parties benefit from the involvement of the other.

4. The REI Pro is responsible for 100% of the cost for the cosmetic-only rehab work (paint, etc.), with no building permits, that helps create the 30% in equity (70%/ARV) which helps justify PLCC making an investment in the deal in the first place. It is the new equity in the deal that creates the security for the

second position note that we receive at closing. Typically, the (rehab) upgrades to the property are limited to what some in the industry refer to as a “lipstick rehab”: cleaning, painting, minor repairs, etc. That can be finished in relatively short order.

E. We limit our DPAP Program to property investments where the REI Pro has their exit strategy already planned out:

1. Fix/Flip.

2. Buy-and-hold the property. The REI pro plans to refinance the property in a matter of a few months—six months max. The refi pays off the second position note.

F. PLCC will supply the text for the JVA, closing instructions and promissory note, and other docs as required, etc. It is the job of the PDP to then oversee all the final docs that will eventually go to the closing agent.

G. PLCC reserves the right, at any time and without restriction (for any notes they take possession of), to pre-sell, assign (sell), hypothecate (borrow against) or pledge the deed and note from this transaction to any other party of its choosing, and the note will be assigned without recourse.

H. There must be a minimum of $20,000 net profit in the project for PLCC.

I. Funding details

1. We normally run the (wire transfer) funding for all deals through our Corporation, however the final decision

about whether we opt to fund via our Corporation 

or from our funding arm, The Edith Capps Trust (TECT), is

at our sole discretion.

2. We wire transfer the funds needed by the REI Pro into escrow, from TECT for example, when we are

instructed to do so by the closing agent.

Math details, generic example

A. What follows are details for a generic JV deal.

1. Is based on an investment potentially being undertaken by an experienced REI Pro. Time frames from

beginning to end of the average rehab project usually runs a few months. The REI Pro has an

opportunity that he has penciled out as viable; it is ready to go. What the REI Pro lacks is DPAP (gap)

funding money. If the deal is right, PLCC is prepared to provide the needed DPAP funding.

2. The numbers that follow:

a. May have been rounded slightly up or down.

b. May or may not reflect current costs in your area, due to regional variations in the costs for labor,

supplies, loan rates, etc. The following are just “ballpark” estimates and are not intended to reflect

current market conditions and may not include all fees, costs and expenses.

c. Due to changing market conditions over time, please only use the following as a rough guide.

B. General information:

1. ARV: $600,000 (confirmed by a recent appraisal)

2. FMV of the property to be acquired = $500,000 (confirmed by the same appraisal)

3. Purchase price: $400,000 (includes cosmetic rehab funding provided by the REI Pro)

a. 80% funding (seller carryback, subject to, private source) = $320,000

b. 20% Down Payment from PLCC = $80,000 ($400,000-$320,000)

4. PLCC's profit share = 10% x FMV/$500,000 = $50,000

Deal Work Up Form:

A. Generic Example, Math details

1. ARV: $600,000

(confirmed by a recent appraisal)

2. FMV of the property to be acquired =

(confirmed by the same appraisal) $500,000

3. Purchase Price $400,000

a. 80% primary funding

(80% x $400,000) $320,000

b. 20% down payment required

(20% x $400,000) from PLCC $ 80,000

$400,000

4. Gross profit ($600,000/ARV-$400,000/PP) $200,000

5. PLCC equity profit

(discount from the seller), 10% x $500,000/FMV $ 50,000

6. Remaining balance: $200,000/#4-$50,000/#5 $150,000

NOTE: This is the REI Pro’s potential profit, less:

cosmetic rehab expenses, closing-related costs, promissory note interest expense, 1 st & 2nd notes, etc.)$200,000

7. Purchase Price $400,000

8. After Repair Value (ARV): $600,000

C. Deal details, at closing

1. FVN (Face Value of the Note) that PLCC receives at closing

($80,000/V. A. 3. b. above + $50,000/V. A. 5. above) $130,000

2. Estimated amount REI Pro receives

(after the sale or refi of the property,

$200,000 DP/ V. A. 4. above - $130.000/#V. C. 1. above) $ 70,000

$200,000

3. Purchase Price $400,000

4. After Repair Value (ARV): $600,000

Free info pack

If you would like us to send a Deal Work Up Form, Instructions, etc. about this

program to someone else, please EMAIL their information to: clientsupport@promiselandcapital.com

1. Name

2. Phone number

3. Email address

Sincerely,

Jarvis Gandy

President 

Promise Land Capital Corporation

La Jolla , CA 92037

619 760-4205

https://clientsupport@promiselandcapital.com

ADU Soft Cost Assistance Program

Please find below information about the Additional Dwelling Unit Soft Cost Assistance Program for experienced real estate investors.

The Additional Dwelling Unit Soft Cost Assistance Program (hereafter referred to as ADUSCAP), provided by Promise Land Capital Corporation (hereafter referred to as PLCC), offers alternative financing to experienced Real Estate Investors Professionals (REI Pros)/landlords, who already own a rental property i.e. it is non-owner-occupied (NOO) which the owner currently oversees as the landlord.

The landlord desires to add ADU(s) to the property to increase his rental income and overall asset value of the property.

Pre-Construction Preparation

A. The first thing most REI Pros need to do is to study the costs and time frames involved. The entire process of designing, permitting, and building a new construction accessory ADU can take anywhere from 5-18 months, depending on a LOT of different factors, such as the complexity of the design, the city in which the ADU is to be located, the condition of your site, the weather at the time of construction, availability of general contractors, etc. Breaking the complete ADU process down to individual timelines and processes, here are some typical scenarios: Design & Development: 1-3 months; Permitting: 1-3 months; Construction: 3-12 months.

B. Most REI Pros consult with a licensed architect early on in the process to get a handle on costs, time frames, etc. in order to wind up with Architectural Plans that are then submitted to the appropriate planning department authorities in order to obtain building permits.

C. Typical ADU permit submittal requirements normally include, but are not limited to, the following items:

1. Complete Land Use Entitlement Application;

2. Architectural Plans (Site Plan, Floor Plan, Colored Elevations, & Color Sample and Material Sheet);

3. Complete set of photographs of property;

4. Preliminary Title Report (6 months current);

5. Grant Deed;

6. Initial deposit of say $1,400 (plus or minus depending on the city or county you are dealing with).

D. There may also be what are known as “entitlement” issues with the property that can include soil testing, survey work, utility right-of-way issues, etc. This may require entitlement professionals to survey your property to ensure there will no problems down the road. The Architect can help you with entitlement issues, if any Funding

A. In California currently, the average cost for a fully complete, free-standing ADU is running between

$200,000-$400,000. This may be more money than the landlord has on hand to spend on the project. If no other financing options are available, The REI Pro/landlord may need to consider securing a new first

position loan to pay for everything related to the new ADU(s).

B. However, most lenders will not pay for what are referred to as “soft” or “pre-shovel-ready” costs for Architectural Plans, building permits and other ADU-related costs: city fees, school fees, utilities, etc. (a.k.a. “junk fees”).

C. For the sake of discussion, assume the REI Pro needs $100,000 for the all the aforementioned soft costs. The amount of time that the REI Pro needs use of the “soft” cost funds is estimated to be six months.

D. The lender (for the eventual new first position loan) recommended that the landlord reach out to a funding investor for the $100,000 in soft costs. In return, the funding investor receives a second position

note, with an annual interest rate of 14%, due and payable in six months. The funding investor’s markup = 50%: $100,000 x 50% = $150,000 (face value of the second position note).

E. The REI Pro was required, by pre-arrangement with the (new) first position lender, to refi the property (with a new first position loan) as a condition of providing the $300,000 ADU construction financing. The new first position loan was based on a substantial amount ($600,000) of new equity that the ADU added to the overall value of the property (2 x $300,000 construction cost as a rough guide).

F. The good news is that the landlord’s annual profits increased as the result of the higher monthly rents that the upgraded property now provided. After six months, the new first position loan was used to pay off:

1. Previous first position loan balance;

2. Construction costs;

3. Second position note.

G. Result: Even though the REI Pro was required to give up their lower-interest-rate, first position loan in order to refi, the benefits from the increased overall asset value, coupled with new, ADU-related higher rents more than offset the higher loan cost.

Features & Benefits

A. PLCC’s profit is paid for from the proceeds of the new first position loan, which itself is based on the new equity (as well as higher overall rental income) that resulted from new ADU unit(s).

B. PLCC doesn’t require any out-of-pocket origination fees from the REI Pro.

C. We provide ADU Soft Cost Assistance Program funding nationwide.

Explanation, Details

A. We fund deals where:

1. The rental property that the landlord currently owns has a minimum of 30%+ equity in it.

2. What the REI Pro needs is the funds to pay for all the soft costs.

3. The REI Pro has already successfully lined up the new first position loan.

B. Joint Venture details:

1. The PLCC ADUSCAP is NOT a loan.

2. The ADUSCAP functions as a Joint Venture (equity) Partnership (JVP), starting when PLCC provides funds for the ADF soft costs.

3. We form a Joint Venture Agreement (JVA) with the REI Pro’s business entity (LLC or Corp.) and PLCC’s Corporation.

C. When the refi gets funded, say six months down the road, the JVA is dissolved.

D. PLCC’s collateral for providing the soft ADU funding is a 6-month, business-to business, 2nd position,

non-recourse, promissory note with no prepayment penalty that includes the funding amount that PLCC provided + 50% markup + 14% simple annual interest. Simply put, we monetize the (JV) equity into a commercial note (debt).

E. REI Pro’s responsibilities include:

1. Provide a brief, monthly progress report, to the holder of the promissory note, summarizing the different steps completed to date towards completion of the soft/pre-shovel-ready items so that the refi can take place and the construction can begin on the ADU(s).

2. Put up 5% “skin-in-the-game” money (of the soft funding amount that PLCC provides) that includes the following:

a. Closing-related expenses related to the ADUSCAP funding: title and related closing expenses (impacting on the second position note), doc prep by a Professional Document Preparer or PDP (the result being a full and complete package that meets all the requirements of PLCC prior to funding the soft cost money). FYI: PLCC has preferred service providers that we will designate for title including the closing agent, title company and PDP.

b. Modest interest payment reserve held onto by the REI Pro, and paid out monthly to the note holder, spread over six months. For example, if PLCC puts up $100,000 in soft cost funding, then the REI Pro is required to put $5,000 in the closing to cover a. & b. above (5% x $100,000).

F. To reiterate, we limit our ADUSCAP Program to property investments where the REI Pro has their exit strategy already planned out, i.e. the refi loan has already been approved by the (new) first position

lender.

G. PLCC will supply the text for the JVA, closing instructions and promissory note, and other docs as required, etc. It is the job of the PDP to then oversee all the final docs that will eventually go to the closing agent.

H. PLCC reserves the right, at any time and without restriction (for the second position note we take possession of), to pre-sell, assign (sell), hypothecate (borrow against) or pledge the deed and note from this transaction to any other party of its choosing, and the note will be assigned without recourse.

I. There must be a minimum of $20,000 net profit in the project for PLCC.

J. Funding details

1. We normally run the (wire transfer) funding for all deals through our Corporation, however the final decision about whether we opt to fund via our Corporation or from our funding arm, The Edith Capps Trust (TECT), is

at our sole discretion.

2. We wire transfer the funds needed by the REI Pro into escrow, from TECT for example, when we are instructed to do so by the closing agent.

Math details, generic example

A. What follows are details for a generic JV deal.

1. It is based on an experienced REI Pro who desires to add ADU(s) to the rental property they already own. Time frame: six months or less for use of PLCC’s funds for ADU soft costs.

2. The numbers that follow:

a. May have been rounded slightly up or down.

b. May or may not reflect current costs in your area, due to regional variations in the costs for labor,

supplies, loan rates, etc. The following are just “ballpark” estimates and are not intended to reflect current market conditions and may not include all fees, costs and expenses.

c. Due to changing market conditions over time, please only use the following as a rough guide.

B. General information:

1. For the purposes of this example, we are going to assume that:

a. The REI Pro has budgeted $300,000 for the new ADU construction (NOT including soft costs).

b. Once construction is finished, the overall value of the property will go up by $600,000 (2 x $300,000 construction costs).

2. Estimated value of the property AFTER the new ADUs have been completed (confirmed by a recent appraisal): $1,400,000

3. Current FMV of the property (before the ADUs are constructed)

(confirmed by the same recent appraisal): $800,000

4. Balance due, current first position loan (70% x $800,000/FMV): $560,000

5. Amount of funding needed for the soft costs: $100,000

Deal Work Up Form: Generic Example, Math details

A. Estimated value of the property (AFTER the new ADUs have

been completed, confirmed by a recent appraisal): $1,400,000

B. FMV of the property before the ADUs go in

(confirmed by the same appraisal) $ 800,000

C. ADU-related expenses

1. Construction costs $ 300,000

2. Second position note $ 150,000

Total, C1 & C2 $ 450,000

D. Balance due, current first position loan

(Equals 30% equity against the FMV/$800,000): $ 560,000

E. New first position loan amount $1,010,000

F. New REI Pro/landlord equity amount

(After ADU construction is completed,

$1,400,000-$1,010,000): $ 390,000

Total, E & F $1,400,000

Free info pack If you would like us to send a Deal Work Up Form, Instructions, etc. about this program to someone else, please EMAIL their information to: clientsupport@promiselandcapital.com

1. Name

2. Phone number

3. Email address

Sincerely,

Jarvis Gandy

President

Promise Land Capital Corporation

La Jolla, CA 92037

619- 760-4205

https://clientsupport@promiselandcapital.com