What do you think? Funding staging/refresh loans for sellers

[Steve Hodgdon]

Hi BPers' -

We're a licensed lender in California. Just started to experiment with small fix up loans to home sellers. Compass and Berkshire are offering home sellers ZERO interest loans to fix up their houses for sale. 

This has created a scramble for independent brokers. We put together a program to help them compete.

85% max CLTV

5% of CMA value max loan amount. i.e. 25,000 for a house worth $500,000. Any use home owner chooses. Staging, minor repairs, carpet, paint. Focusing on quick spruce up, not construction projects.

No payments. One time interest charge. Loan term 8 months. Demand letter in escrow. Default rules - cancelled listing, 8 months expire triggers a 5% increase interest charge. 

So, writing little loans, 10-50k. Typical payback will be 4 months will net a gross return in the 20%+ range. Average DOM here 65 days. 

Somebody poke some holes in this. I think I have more business than I can absorb. Anybody have experience raising capital for something like this? Thinking I'd sell individual loans with a revenue share so I'm not creating a security.