No lender wants to be left holding the note on a property that won’t sell or has to be foreclosed upon. The goal of an ethical and successful private lender is to build mutually profitable relationships with builders, resulting in gains for both parties and, in turn, additional deals. Due diligence before funding the deal is in both parties’ best interests. A private lender taking the time to learn the building industry also can provide value-add opportunities for the borrower.
I hear all the time that, with conventional home mortgage interest rates hovering around 3.5%, now is one of the best times ever to secure a real estate loan. Yet, when I talk to a hard money or private lender, the quoted rate always seems to come back in double digits. I understand that these types of loans should be priced higher, but why such a disparity?
Many builders and developers—particularly those who weathered the 2008 credit meltdown—have, at least to some degree, blemishes on their credit reports. For those of us who have been in the real estate game for quite some time, this is hardly a surprise. But can a real estate entrepreneur with truly “bad” credit get hard money financing for a fix and flip project? The answer is unequivocally . . . maybe.
That’s right, Happy Oktoberfest to everyone! Here at Walnut Street Finance, we apparently speak not only real estate financing, but German as well.
While the masses flock to the local biergarten, and the smell of wiener schnitzel and sauerkraut permeates through the air, our team at Walnut Street Finance is busy servicing the Washington metropolitan area with the most efficient and professional hard money financing possible. As you chow down on your bratwurst, you may be wondering:
The project came to a screeching halt just two months short of completion. The home in Virginia was bought with the plan to completely renovate and sell for $1 million. Unfortunately, Unfortunately, just two months away from being completed the builder ran out of money.
He was a solid professional with a strong eye for value. He had no other resources to tap and no bank would help him...so what could help him? A hard money loan.