A man and his wife owned two properties in San Diego County, one in North Park and one in El Cajon. The property in North Park was worth 750k. There was a lien in the amount of $250k on this property. The owner wanted to get started creating a family legacy.
They had enough money to buy an ethnic market in El Cajon. He and his wife decided to move from their North Park house to their El Cajon house to live closer to the market. They want to work in the market, together with their three adult children.
As he was evaluating the income potential of the market, he realized he could generate much more income if he was able to invest in upgrading the market and add a bakery. There were other improvements he wanted to make as well.
What happened next:
RanchoTed loaned him a 100k in the second position on his North Park property.
This is another American dream story. The borrower is a husband and wife with three adult children. They wanted to work together in the market as a family and begin creating a family legacy. For that to work out well they had to increase the income generated from the market.
Once the market is producing enough income, hopefully within 1-2 years, he should be able to refinance the North Park property (first and second loan) with a bank. At the time of the initial purchase of the market, he could not prove his income and therefore he did not qualify for a bank loan for upgrading the market.
The other option the borrower has is to refinance the market once it produces more income and pay off the 100k hard money loan that way.
Either way, this story is another powerful example of how hard money can bridge the gap for the time a borrower needs to qualify for a conventional bank loan.