As a rehabber, your goal is to rehab and sell a home quickly and with as little hassle and expense as possible. It’s easy to get so caught up in the whirlwind of repairs and necessary maintenance that you forget the aesthetic power punch that professional home staging for rehabbers can bring to your property. I call it the magic of staging because that is exactly what it is—that final magic touch that will help you sell your rehabbed home quickly and for more money.
Hard Money Lender – Hard Money Loans – Blog
As a hard money lender, I want you to be aware of a disturbing trend that I’ve seen with many of our own properties. This trend is for buyers to pick your property apart and use the home inspection to renegotiate the price. You need to be aware – and be weary – of buyers who are fishing for a bargain and not emotionally vested in the transaction. They use the home inspection as a tool to renegotiate the price you’ve already agreed on. They demand more and more, and are ready to walk away from the contract if you don’t agree to meet their demands. As a hard money lender, I have several suggestions on how to handle such situations.
In our previous blogs we’ve talked about the art of pricing your newly renovated rehab property. To summarize it’s all about finding the balance between setting the highest price and not letting your property linger on the market. Let’s assume you’ve carefully done your homework and – voila! You now have an offer or two to ponder. It’s an exciting news, but as a grizzled hard money lender and a real estate investor, I have some words of caution. If you give in to wishful thinking and let your guard down at this stage, you can jeopardize the timely sale of your property. You might also lower its value in the eyes of potential buyers and kiss your best price good-bye. Do NOT get euphoric. Proceed with caution.
What are private money lenders and how are they different from banks and credit unions? Today, we examine the basics of private money rehab loans and how they can help you compete with cash buyers, lower your cost of funds and leverage your existing capital to take your business to the next level.
Private rehab loans are very different from traditional mortgage programs offered by banks and credit unions. When you purchase a home to live in, you’re applying for mortgage products specifically designed for consumers. As such, they are strictly regulated. Lenders have strict rules and requirements when it comes to origination, underwriting, servicing such loans. In addition, to free up the capital most lenders sell off the originated loans to larger institutions such as Fannie Mae or Freddie Mac. That means that those consumer loans need to comply with the underwriting criteria of those institutions as well. All these factors limit how bank view risk and what kind of loans they can offer to consumers.
As a hard money lender, I have deep respect for the hard work and hundreds of hours our borrowers put into each of their rehabs. Some of that work is exhilarating – think about getting that contract signed, especially when the price is right! Some of it is tedious – pushing through the county bureaucracy and dealing with inspectors. Some of it is downright maddening like when your contractor is dragging his feet or slams you with a change order. When all this hard work is done and your property is about to go on a market, we know you feel like breathing a sigh of relief. But wait. You’re now facing your final challenge – pricing your property right.
As a private money lender, we work with a wide spectrum of clients: from those who are just starting out in the rehab business to borrowers with substantial experience and funds of their own. It’s self-explanatory why someone with only modest savings needs to work with a private mortgage lender. However, why would someone use them if their have enough cash of their own? The answer, my friends, is leverage. This article is a continuation of our series on hard money calculators, so if you need a refresher on the basics, please click here.