
The main difference between private and traditional lending is that private lenders base their loans on the after-repair value of the property. In contrast, conventional lenders base it on the current market value. Both the after-repair value and the current market value is ultimately determined by a licensed appraiser. However, the after-repair value is the value that is not there at the time of the appraisal. It’s simply a projection of what the property might be worth once the planned renovations are completed. It’s based on the sale prices of similar properties rehabbed to the same extend our investor plans to rehab hers.