Profit Sharing Loans

Eligible Properties: Income producing, non-owner occupied properties located within the Municipality of Anchorage and the Palmer-Wasilla core area of the Mat-Su Borough.

Eligible Borrowers: Borrowers must have minimum median credit score of 650 and have demonstrated investment experience with the property type proposed for the loan. In the case of investment groups, all investors must personally guarantee the loan, but only the manager will be required to demonstrate investment experience.

Loan Purpose: Acquisition, renovation or refinance.

Loan Amounts: Minimum of $100,000 and Maximum of $500,000. First position loans only.

Loan to Value: Up to 85% of total cost or appraisal, whichever is lower. Maximum LTV is available only for high quality properties. In most cases, LTV will be 75% or less.

Borrower Equity: Borrower must invest a minimum of 10% of total cost (which may include credit for waived real estate commissions for real estate licensees) and may use secondary financing from Sellers or 3rd party Lenders to bridge gap between minimum equity and Loan Amount.

Loan Fees and Costs: An Application Fee of $500, of which amount $250 will be utilized for a Preliminary Title Report. After acceptance of the Preliminary Loan Proposal, the Borrower shall be responsible for the cost of appraisals and any required environmental or engineering reports. Borrower shall be responsible for all closing costs, including title insurance and legal and the first years premium for casualty insurance. From closing proceeds Borrower shall pay a loan fee equal to 5% of the loan amount.

Loan Term: Ten years but subject to a 10% pre-payment penalty in the first year and decreasing 2% per year thereafter.

Base Interest and Minimum Payments: The Base Interest Rate is 6% and the Minimum Payments shall be the Base Interest only payable in monthly installments.

profit-sharing-loans1Profit Sharing–Operating: In addition to Base Interest, Lender shall receive 50% of cash flow remaining after payment of base interest. Said payments shall be due in monthly installments 45 days after the end of the month earned and shall be accompanied by a financial report in the form prescribed by Lender. At any time Lender may require and pay for an audit of Borrower’s financial records. If the audit documents under payment of profit sharing, Lender, at its option, may call the loan due and payable, or require reimbursement for the cost of audit and double the Base Interest Rate.

Profit Sharing–Sale: Upon sale of the property, Lender shall receive a payment equal to 35% of net sale proceeds in excess of the acquisition cost of the property plus any capital improvements made that were approved by Lender. In determining net sales proceeds the selling commission shall not exceed 6% of the sales price unless Lender approves a higher amount.