Your funds are secured against a SPECIFIC Blue Sky Home and we record a Deed of Trust in the amount of your loan against that specific property with Maricopa County. Once that Deed is recorded, we cannot sell or refinance the property without first repaying you all of your initial investment capital AND all interest due. Anything less than full repayment allows you the opportunity to foreclose on the property.
What is the return, and how is interest paid?
We pay a secured 8% annualized return on your capital. Interest is paid on the first of each month starting after the first full calendar month funds are deployed. Any initial or final days are pro-rated and paid in full at payoff. For example, if an investment is placed on the 20th of September, the first interest payment will be paid on November 1st for the full month of October. The 10 days of interest for September will be paid at close of escrow.
What is your maximum LTV and average LTV on your homes?
At purchase we may borrow up to 80% of purchase price. Almost always we are buying at a discount, so there is more than 20% of equity from Day 1 to protect your investment dollars. On average our debt to value ratio is approximately 65%.
How is the contract structured?
Two simple documents make up our contract: The Installment Note, which lays out the terms of repayment and a Deed of Trust that is recorded against the property with Maricopa County and secures your interest.
How many concurrent projects is Blue Sky Homes working on?
We typically have between 20 and 30 projects within the Phoenix-Arcadia and Scottsdale areas.
What is the protocol if the asset or flip underperforms?
Your principal investment and interest due is guaranteed by the asset, which means if we fail to pay back any principle and interest then you as the lender may foreclose and take the property.
Has Blue Sky Homes ever defaulted on a private loan?
Never. Even on projects that we have lost money we have ALWAYS repaid both the principal and interest in full. Since 2009 we have repaid over $50 million in private loans over the course of 300+ projects without ever missing a payment.
What if the loan pays off early? Can I still make a 8% annual return?
Our company enjoys consistent deal flow, meaning if your private loan pays off early you nearly always have the option to roll the funds immediately into a new loan on another project and continue the 8% annual return. Interest will only be earned on the days your capital is deployed with us.
Can I lend $50,000 and be in first-position?
$50,000 loans will be in a junior position. Typical purchase prices in our market are $350,000 to $500,000, so usually $200,000+ loans warrant a first-position loan.