Market Update for October 21 2013: Private Money Loans Can Solve Complex Situations

Oct. 21, 2013 - PRLog -- In the words of Wayne Gretzky: “You miss 100% of the shots you don’t take.”

I have two deals where the clients are taking calculated “shots.”  In one case, the client has not filed tax returns in the last 5 years.  He recently inherited a tri-plex with tremendous equity.  He needs to pay off a business partner, get himself out of some debt and pay off property tax liens.  The other client’s situation is similar.  She inherited a duplex from a deceased family member.  The property has no loans against it, but it is in severe disrepair.  It needs $200,000 in upgrades, and her sister is in need of on-going medical care, which will cost about $50,000 in the short-term.  For both clients we are pursuing “private money” loans also called “hard money.”

These loans are regulated by the government regarding maximum rates and fees.  But they are meant to be short-term solutions to major challenges in a client’s life.  They require careful and calculated risk.  They require advance planning to ensure that a viable, and real “exit strategy” exists.  They require, in short, that instead of selling the properties in a fire-sale, that the clients “take a shot” and plan for the future.  In both cases, it is incumbent upon CPK Mortgage, as their broker and fiduciary, to line-up a way out of these loans.  In the case of the first client, we’re connecting him with accountants and CPAs, so that he can file his tax returns and refinance in the next 6 months to a year.  He must file his taxes.  He must be responsible.  And his responsibility will enable him to extricate himself from the high rate of the private money loan.  The other client’s situation is similar: she must use the cash from the loan to hire a contractor, with whom she has already consulted.  The work must be completed in a timely and professional manner.  Then she will be able to refinance to a great rate, while still having the short-term cash to care for her sister.

In both of these cases, short-term risk will yield long-term positive results in terms of high cash flow from real estate owned.  The planning and discipline is key, though, and that’s where working with an advisor like CPK Mortgage comes in.  We have the resources and the follow-through to help our clients from the first loan to the take-out loan to put them back on solid, long-term financial footing.  Call today for more info!