How A Hard Money Loan Saved The Day
There is a special deal we did recently that shows why real estate investing is great for everyone involved. The deal was on a double lot property in Kewaunee, Wisconsin. Each lot had a single-family home on it, and the owner really wanted to sell.
- Both homes needed a lot of work and the current owner didn’t want to fix either properties. He just wanted to cash out.
- The buyer saw a good deal in fixing up both properties. One was a fix and flip and the other he wanted to rehab and rent. Most lenders do not like lending on properties that need to be fixed, so the buyer had to find a Bridge Loan, AKA a Rehab/BRRRR loan from a hard money lender to get the deal going.
- The buyer brought the deal to us to review. We liked it and showed it to our group of private investors. One of them wanted to invest but didn’t have the full amount required to accept the deal. So, we found another investor to partner her with so that they could both benefit from the deal.
We did our homework and our own review. After that we agreed that this was a sweet deal. Here are the reasons:
- The buyer needed enough money to buy both lots and flip one of the properties.
- Once it was repaired, the ARV (after repair value) had to be large enough for the sale price to pay off our bridge loan.
- After payoff, the buyer/investor had more than enough money to repair the second home for a rental, owned free-and-clear!
This loan ended up lasting about 40 weeks. This is a bit longer than our normal hard money loan.
Our goal for every loan is to make deals work that are wins for everyone involved:
- Motivated sellers: They wish to cash out at a fair price.
- Sweat-equity real estate investors: They buy properties in need of repairs and renovate it. They either want to do a fix and flip or keep it as a long-term rental property.
- Hard money lenders like Best REI Funding: We lend for short terms (months rather than years) at fair rates that still earn a good return for our investor group.
We are here for the long haul in Wisconsin real estate. We're committed to helping fellow Wisconsinites make great real estate investments.
If you have any other questions please Contact Us online or give us a call at (888) 341-2282.