We’re talking about Provo. Provo Restaurant. As you know we have a deal struck, the Provo Restaurant goes like this: They had the restaurant and the house. So the restaurant we initially had hoped was worth about 500k, the house was worth 260k, he owed 125k on the house. Now this is starting to be a really tight loan. We thought the property was 500k but it is 400k. So we can lend on this one 200k, and on this we could lend only half of this which is 130k, minus 125k, which would put it at 5k.

So in theory we only have the ability to lend 205k, however they need 300k. To be able to stay in the 50% of the value so we go over above this, keep in mind you still want to do a loan right? So the house is worth 260K, by the way this is a really solid 260K, great shape, people took really good care of it. We know that they love their house because it’s in great shape. So in my mind a lot of people would lend 80 to 90% of the number and if push comes to shove, we have to sell that house, we got a good $100,000, that would be added to that house. But we’re concerned that if we make them the loan they will ultimately go bankrupt and this may stall out for a year.

So I went to him and I said this: Restaurant owners let me make a suggestion. If you want to deed to me your property I would think of making you a loan and I’ll give you the ability to buy this property back.

So I told him I’ll give you 300k. This is what I’m buying: 400k restaurant and a 260k house. So I’m buying 660k for this stuff minus 125k which is what they owe for the house. So I’m buying from them 535k of stuff for 300k dollars.

Now, if somebody came to me and said, would you buy this for this price? I would say absolutely, because I can turn and make at least that spread right there. Now the problem they have is that we just recently found out that the title report said that they have $12,000 in tax liens that need to be paid.

We were going to make him a loan, and under the loan the state of Utah actually said that it would subordinate to my new loan and they can pay it off after. But we actually take title of the house the state may not take that of the property so we might not be able to make that loan. But we got the owners on board ready to go, we are talking to the state of Utah right now to see if they would subordinate. If they do then we are darn close to be able to close this one. Thank you. 

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