As part of our broader strategy of financing the creation of housing in cities with a supply shortage, we’ve invested roughly $1.6 million in the acquisition of a 16,600 square foot (0.38 acre) property in Upland, California as the future site of 19 new townhomes.

A suburb of San Bernardino within the Inland Empire, Upland is expected to continue to grow faster than the national average, increasing demand for new housing. Population growth in this area is attributable to the area’s proximity to both Los Angeles and Orange County, as well as immense job growth in the logistics industry.

Business plan

The borrower, Ridge Crest Real Estate, plans to entitle the property and finalize permits to build 19 townhomes on the property. We expect this process will take roughly 18 to 24 months. Upon securing the necessary entitlements and permits, they expect to pay back our investment via a sale or refinancing.

Our goal is to earn consistent cash flow from interest payments through the maturity of the loan.

Why we invested

  • Experienced, local partner: Based out of nearby Burbank, CA, Ridge Crest Real Estate specializes in the development of homes. Having acquired and developed over 1,400 lots in Southern California since 2010, they have valuable experience and knowledge of the local market.
  • Strong Local Economy: The Inland Empire, a metropolitan statistical area (MSA) of Southern California once known for its citrus groves, has become one of the fastest-growing job markets in the country. Over the five-year period ending August 2018, employment in the Inland Empire grew 22%, more than double overall US job growth. Now, as the 13th largest MSA in the country, it attracts some of the nation’s largest manufacturing and logistics companies, including Toyota and Whirlpool.
  • Attractive margin of safety: Our loan is equal to roughly 82.6% of the total value of the property, based on a March 2019 appraisal. This serves to reduce our risk, as the property would have to lose nearly 20% of its value before the principal of our investment was threatened.