Eagle Bay Business Loan Use of Funds and Buyer/Borrower Current Interest Rate (07/01/2023)

USE OF BUSINESS LOAN FUNDS FOR THE 150 DAY START-UP PERIOD

Current homebuyer interest rate at 30 yr term = For today, Saturday, July 01, 2023, the current average 30-year fixed mortgage interest rate is 7.17%, increasing 9 basis points from a week ago.

Beginning of 1st 150 day period

150 days (4 months)  This does not solve the problem of construction loans.  My expenses are static.  The same amount of work and business expenses will remodel, rehab, and build ten homes.  Building homes is the goal.  I am trying to squeeze out the full amount of building one home.  Selling it and the rehab house will put us in a good cash position at the end of 4 months.  $250,000 is just getting ready and selling the rehab house.  But, I may soon be able to get 80% construction loans from small local banks nearby if I have money in the bank and activity going on.

Starting Funds

+$250,000 This is possible usable fund proceeds from house loan after payment of fees, property taxes, points and other TBD.

  

Equity Loan (Cash Out) to be used to finance the re-startup of the new home building business until we can get through the process of getting several homes built and sold.

+$200,000 <$50,000> Rehab The existing Tiny Home sitting on lot 7 immediately and completing a sale closing to give us a faster first sale at a faster and higher profit sale in the first 45 days.

 

I have been offered $170,000 on this home when finished just because of the chimney fireplace and smoker in this home. It is unknown how old the small home is.  

                        Probably between the 1940s & 50s.

+$232,000    <$18,000> Construction Management and other daily administration 120       days

    

+$192,000 <$40,000> Project Administrative Management by Borrower Principal

+$180,000 <$12,000> Administrative Expenses - Over 120 days, or 4 months

+$173,600 <$ 6,400> Misc Expenses & Transportation Expenses

                      

+$167,200 <$ 4,000> 3rd Party Due Diligence work

+$163,200 <$10,500> Building Lots Preparation and repair streets

+$152,700 <$6,400>       Marketing

+$146,300 <$72,697> Remodel House #1 28336 Paperwood Drive

+$73,603       <128,800>     1st Ground Up new home - Cost to build $128,000.  (850 sq ft                                                      X $151psf = $128,000) Plus lot @ $20,000 = $148,000 total cost. 

                                                minus $20,000 lot prepay = $128,000 

<$54,397> <$50,00> Debt Service Finance interest 13%

<104,397> Cash on Hand Remainder of $250,000 loan at 13% after 150 days

Income: Net New Income for 1st 100 Days

+$ 80,000 Sell house #2 for $150,000. Cost to rehab $50,000 plus $20,000 lot = <$70,000>

+$ 70,000 Sell first ground up new construction affordable home within 120 days.

Cost to build $128,800

Selling price $198,800 Sell and Close Sale in less than 120 days.

+$150,000 Total Net Income within 120 days

By building one ground up new single home unit with the Cash Out loan we will get more production out of our static expenses and sales prices. This will adjust the impact of the 13% loan downward by bringing in more cash from the same amount of expense. It will cost me less to get more.

During this time we will have developed the entire effort by pushing to get the results that are needed. If I have not found the sub-contractors and put the properties in shape within the 5 month period I will have wasted another selling season.

We will already be working in October and will not have made the progress needed to build and sell in the winter in the event we have another mild one. I no reason to burn the loan down to $45,000 and not have anything to show prospects in October. I don't see any reason to believe that I can do better or worse than this schedule. I just know that if I am not pushing to do better, then there is no one else to do it.

Position after 150 days:

Cash on Hand from original loan and profit made $45,603. All bills paid for remodeling, construction, staff and miscellaneous

During this time the remodeling of House #1 was a one-time cost. No more than normal maintenance can be expected for the next 10-20 years. Within the next 120 days without this remodeling expense which did not yield any cash but raised value of House #1 by $200,000 (est.)

Cash on Hand without remodeling of house #1 would have been

$45,603

+$72,697

$118,300 CASH on HAND after 1st 120 days - adusted by removing costs to remodel #!

But, in October the actual $45,603 won't get us to spring. If it is a bad construction winter, we can handle that fine, if we have product to sell going in to the winter. We sold most of the year during Eagle Bay Version 1. I see that as nearly probable this year. I have missed the two best selling seasons of my lifetime for the stupidest reasons. I am not going to take a chance of losing momentum over the winter and having the same problems starting up next year.

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Buyer/Borrower estimated home loan terms as of 07/01/2023:

20% Down

80% Loan

Estimate Sales and Finance for Consumer Purchasers

600 sq ft Woodsman = Sales Price $150,000

$150,000  price
-   30,000  20% Down Payment
$120,000   80%, 30 yr, 7.2% fixed rate loan, - payment $816.25 monthly

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FINANCING EXAMPLE OF THE CONSUMER LOANS TO BUYERS

850 sq ft Modern Home

Sales Price  $198,000

$198,000    price

- 39,600 20% down payment   

$159,040 80%, 30yr, 7.2% fixed rate loan - payment  $1,081.80 monthly               

Questions about financing? click here

Danny Hammond Earlier Contributions to the Project

Danny Hammond is the original developer of Eagle Bay.  He purchased 1200 acres of land and for $550,000 from Dr. Theodore Atlas of New York in 1980.  Some land has been sold during the Savings and Loan Crisis which was caused by the US Congress enacting the 1986 Finance Tax Act.  More land has been sold since the 2008 Wall Street Meltdown that can be said started in 1999  and has lasted through today.

There are many lots yet available. The 8 already owned free and clear lots and the 100 lots that I can get 100% ownership of for $50,000.  I need to get that done before that deal gets away from me.

All of the land was surveyed Platted and recorded and this was paid for by Danny Hammond owned companies.  A dam backing up a 6 acre Eagle Bay private fishing lake was built and approximately 11 miles of road were cleared according to the 12 plats that make up Eagle Bay a subdivision recorded in Benton County Missouri.  This was all paid for by Danny Hammond or came from sales of lots.

All that remains of the debt is $50,000. That debt is on 100 more Ready-to-Build new home lots situated near near the free and clear properties that are the subject of this proposal.

If I can get the loan to $300,000 I can do everything above and add collateral to the loan package.  In the 1980s we were selling lots and an average of $5,500, I can control the HOA and get the selling price to average $20,000 each.  Those 100 are the best lots available.  The total value of that package by the time we build out my 8 will be $2 million dollars and that is very possible to do.  There is no one else around that can think that way.  But, with the 3 good selling seasons in a row, someone will come around who gets it.

Eagle Bay is part of a very large destination vacation and 2nd home and retirement area which is a heavily wooded and mountainous area defined by Lake of the Ozarks and the nearby Truman Reservoir, which are very large Lakes and have very diverse usage patterns due to the very different ages of the two very large lakes.  Lake of the Ozarks which is created by Bagnell Dam which was part of the Roosevelt New Deal to help the country get back on its feet after the Wall Street Crash of 1929 and was completed in 1931. 

The Osage River is dammed by Bagnell Dam, which thereby impounds the Lake of the Ozarks. The dam was built to produce electricity for for rural Missouri and St. Louis.  Both Bagnell Dam and Truman back up the waters of the Osage River and its tributaries.  It is almost exactly 99 miles from Bagnell Dam upriver to Truman Dam.

These two lakes are very large and well known in the midwest.  Eagle Bay is located between Kansas City and St. Louis. ( See the "Photos & Maps Section")  Those two metro areas have a total population of 7 million.  Weekend visitors own homes from $75,000 to tens of millions of dollars.  

Regular weekend visitors come from cities as far away as Chicago.  Lake of the Ozarks begins at Bagnell Dam on the Osage River.  It is 99 miles from Bagnell Dam to the Truman Dam which collects water from all of the small tributaries that combine to form the Osage River.  Locations on Lake of the Ozarks are known by the nearest mile marker.  

The Eagle Bay private boat ramp enters the lake at the 78 mile marker (mm).

Danny Hammond bought and paid cash for the 4800 sq ft subject property for $234,000 in 2011. That is what I built if for in 1998. Now it is the house and house #2 and the 8 ready-to-build new home lots. There are no liens or loans on the properties and there have been no liens or loans on the property since the 2011 purchase,

Therefore, the borrower has already invested all of the infrastructure, $234,000 in the properties in cash in 2011, and whatever is the true value in today’s market is his equity contribution.

Included in the 1st 120 days $285,000 budget is a $48,000 rehab of an existing small home with some very unique features. It is situated on Lot 7, Block 33, Plat, 5 of Eagle Bay Subdivision contiguous to the 4800 sq ft home. This small affordable home when finished will probably be sold for $97,000 - $170,000. It will take 6 weeks from funding to move in.  This small home has some very uniqure features. It is owned by Danny Hammond and is free and clear.  

With the $48,000 rehab performed by the construction arm of Boulevard and the sales by Boulevard Real Estate, we should make a $70,000 profit in the first six weeks after funding.  During that time, we will be setting up the restart and beginning 9 ground up new homes.

We will use the small house as our "special" for the entire time of its rehab giving us the story for internet marketing. We will put daily or weekly video of the restoration of the historic small house and its magnificent chimney and smoker. This will firm up the value of the first eight new homes we will be building.

This will also firm up and raise the value of the larger home.  This is one exit strategy. To sell that property which would not close the business.

I do not want to sell it, but that would be exit strategy #1 in the event of problems paying for this loan. Something that I cannot envision happening even if something were to happen to me.

We will be using the larger home for several things including four mini-hotel rooms giving the buyers of our homes a convenient place for their visitors to stay since we are going to build smaller affordable homes. 

We have a total of over 100 ready-to-build new home contiguous lots tied up. Danny Hammond is the original developer of Eagle Bay beginning in 1980. So, we would just repeat this or whatever pattern works best and build smaller versions of the larger home to be used as mini-hotels every 30 or so homes sold. These mini-motel rooms should be affordable, but also make a profit.

Additional Funds Needed If Provided By the Same Lenders

When 8 homes are built and sold with all lot sales recorded at $20,000 all of the lots will have comps to show the current value at that time to be $20,000 creating a 2nd large money stream.