A recent deal RanchoTed funded in Spring Valley teaches two important lessons.
A man wanted to sell his house in Spring Valley and buy another property in Utah. However, in the sales process he found out that his Spring Valley house had a cracked slab. The crack was not bad. Nonetheless, the cracked slab scared buyers, and he had a hard time to sell the house.
His realtor offered to buy the property. Because the seller had to close quickly on the property in Utah, the Spring Valley deal also had to be finalized within 14 days. Therefore, a bank loan was out of the question.
RanchoTed stepped up to the plate and gave him a loan to buy the house. To complete the deal quickly, the seller dropped the price from $450,000 to $350,000 (a 22% decrease).
The buyer put down 15% ($52,500). RanchoTed gave a hard money loan for the remaining $297,500. That corresponds to a loan-to-value of 66% based on the value of $450,000.
Lesson 1: The buyer got a great deal because he was able to move fast. He overcame that a bank loan would have been too slow in this situation. He got a hard money loan from RanchoTed. He closed fast and got the house at a discount of 22%.
Lesson 2: On the other end of the deal, was the seller. The seller was appreciative of the deal because he was able to close on the property in Utah. However, his rush to buy a property in Utah motivated him to sell his current property in Spring Valley at a significant discount. Maybe he sold it too quickly? One option he might have considered is to buy the house in Utah with hard money. This would have given him the time to sell the house in Spring Valley for a higher price; one that is closer to its actual value.
It pays to be knowledgeable about real estate financing options including hard money. RanchoTed’s philosophy is that “hard money is not hard” – you must know when and how to use it.
Unfortunately, realtors lose deals too often because the buyer’s financing falls through. Hard money is often viewed as “too expensive”, yet, in many circumstances it is wise to consider hard money as an option to overcome costly challenges or take advantage of opportunities with great return-on-investment.
We are always happy to brainstorm with you about this question: When is the situation right, and when might it not be the best choice?
Feel free to call us when you see a deal of yours is getting into trouble.