Offering Amount: $1,400,000
Estimated Return: 7.50% - 7.75% Annualized Return1
Investment Type: First Lien Mortgage (Land & Construction)
Unit Price: $10,000 per Subscription Unit
Offering Date: October 2020
Investment Horizon: 12 - 30 Months (3+1+1+1 Months)
Dividend Schedule: Prepaid before per Period
1 7.50% Annualized Return for Investment of 1-19 Units;7.75% Annualized Return for Investment above 20 Units.
Site Location: 45-45 211th St., Bayside, NY 11361
Region: Bayside, Queens, New York
Land Area: 9,000 SF( 65 Ft. x 125 Ft.)
Zoning: R3-A(FAR 0.5)
Land Closing Price: $1,500,000 U.S. Dollar
Land Closing Date: November 4th,2020
- The project is located in a matured residential area in Bayside, Queens. The land area of the project is 9,000 square feet. By now, it is a single-family residential building. The developer will subdivide the land to develop 3 independent two-family houses.
- As in the core area of Bayside, with abundant living facilities nearby, including Asian supermarkets, convenience stores, restaurants and cafes, the site is appropriate for residential purpose. In addition, the New York 26th school district where the area is located offers excellent quality of education and good public security, making the neighborhood one of the hottest communities to settle in New York City in recent years.
- The transportation around the neighborhood is convenient and accessible in all directions in New York City. It is 0.4 miles from the Long Island Railway Station with only 7-minute walkway; 25-minute by train to Midtown Manhattan, and 20-minute by bus Q12 to Flushing; 20-minute by car to JFK International Airport.
The developer expects to purchase the land, with a total land area of 9,000 square feet, at a price of $1.5 million in November 2020. The current buildings on the land are only a house and a utility room, left plenty of usable space. According to the architectural planning, the purchased land will be subdivided into 3 lots, and each lot will be developed to a two-family residential property with the area as following:
Lot 1: 3,075 SF (Gross Buildable Area: 2,143 SF);
Lot 2: 3,168 SF (Gross Buildable Area: 2,200 SF);
Lot 3: 2,760 SF (Gross Buildable Area: 1,956 SF).
The zoning of the land is R3A. It is expected that a two-story, two-family residential building and a separate single-car garage will be built in each lot. Each residential unit will have 3 bedrooms, 2 full-bathrooms, an open kitchen, and a mixed space of living and dining room. The unit on the first floor will have a full-basement that can store accessories, with a laundry area, utility room, and a full-bathroom.
Expected Dividend Calendar | |||||||
---|---|---|---|---|---|---|---|
First | Phase I | $750,000 | 11/18/2020 | 11/4/2020 | 5/3/2021 | 6 Months | Prepaid Dividend |
Phase II | $250,000 | 3/18/2021 | 3/3/2021 | 5/3/2021 | 2 Months | Prepaid Dividend | |
Phase III | $400,000 | 4/18/2021 | 4/3/2021 | 5/3/2021 | 1 Month | Prepaid Dividend | |
Second | 5/18/2021 | 5/4/2021 | 11/3/2021 *2 | 6 Months | Prepaid Dividend | ||
Third | 11/18/2021 | 11/4/2021 | 5/3/2022 | 6 Months | The develop has the option on extension | ||
Fourth | 5/18/2022 | 5/4/2022 | 11/3/2022 | 6 Months | The develop has the option on extension | ||
Fifth | 11/18/2022 | 11/4/2022 | 5/3/2023 | 6 Months | The develop has the option on extension |
*1 In case of holidays and non-working days, the payment date will be automatically postponed to the next working day.
*2 After the expiration of the second Dividend Period, the developer has the option to extend the borrowing 3 times. If the developer chooses to extend, the investor will receive dividends at the same rate of return during the postponement.
Sufficient Collaterals
- According to the appraisal provided by the third-party agency, RCI Appraisal Corp., in October 2020, the current value of the land is approximately $1.42 million; after the completion of the project, the valuations of the three two-family residential properties are US$1.44 million, $143.5 Million, and $1.4 million, respectively, in a total of $4.275 million.
- The estimated total equity investment by the developer is about $1,685,000. Counting the total $1.4 million mortgage originated by CrowdFunz Fund 613, the expected Loan-to-Cost(LTC) ratio of the project is about 45.38%.
- CrowdFunz Fund 613 will possess three types of lending security: a) First Lien Mortgage secured by the underlying properties; b) 100% Ownership Pledge of the borrowing entity; c) Unlimited Personal Guarantee co-signed by the key shareholders of the developer. Three types of lending security together can further reduce the possibility of default.
Prime Location, Potential Appreciation
- The site location is close to Bayside Station, a key transportation hub in Queens, and the surrounding public transportation is convenient. The buses include Q13, Q28, Q31 etc. can reach communities in Queens, Little Neck, and Great Neck; the LIRR train lines such as Penn Station and Port Washington can commute directly to Manhattan or Long Island. There is only 20-minute driving distance to JFK International Airport as a plus.
- In recent years, there has been a boom of school district housing in the site located area, which leads the sales and rental markets being active. Due to the pandemic this year, suburban areas in New York have also shown potential appreciation. According to data from Property Shark, the median house sales price in the Bayside area is $775,000; based on data provided by StreetEasy, the median monthly rent is $2,000 in Bayside, Queens.
Seasoned Developer, Local Familiarity
- The project developer has more than 20 years of development experience in the New York real estate market. The main developments are in Queens and Brooklyn. The developer has deep understanding of the needs in local regions and has good project supervision and management capabilities. The developer also establishes cooperative relationship on the supply side of building materials, controlling substantial adjustment to match the project processes on time.
- CrowdFunz Fund 613 will be the first business cooperation between the developer and CrowdFunz. Based on the excellent development experience of the developer, CrowdFunz believes that financing and investing in this project will be a sound and mutually-beneficial start.
Clear Debt Spending, Straight Exit Strategy
The mortgage originated by CrowdFunz Fund 613 will be divided into three phases, aligning with the processes of the project:
- Phase I: Land Loan in total of $750,000, exclusively for acquiring the land. It is expected to be originated in early November 2020. After acquiring the land, the developer will start the demolition of existing buildings and the construction of proposed properties;
- Phase II: The First Construction Loan in total of $250,000, for the construction costs after the completion of foundation works of three proposed properties. It is expected to be originated in the first quarter of 2021;
- Phase III: The Second Construction Loan in total of $400,000, for the construction costs after the full installation of the doors and windows of three proposed properties. It is expected to be originated in the second quarter of 2021.
The mortgage originated by CrowdFunz Fund 613 will possess the first lien on the underlying properties. In addition, the project company, ABSSV Group Inc., will pledge its 100% equity interests to Fund 613, increasing creditworthiness and reducing investment risk. After the development being completed, the developer will repay the loans through the proceeds from the sale of the proposed properties.