Thursday, July 23, 2009

More Details on Newest HML

Last week, I wrote about the latest hard money loan I made. I have some updated details now.

The original analysis was done figuring the units were bringing in a total of $3,550 in rent per month. The actual amount is almost $4,000. The borrower is a retired attorney. She plans to "season"* our note for 6 months and then refinance via a conventional bank loan. This means we will likely be out of this investment in 6 months rather than 1 year.

* To "season" a note means to hold it for a period of time, usually 6 months, before trying to refinance it. This is to create a history of (hopefully) on-time payments that the new lender can look at as a indication of the borrower's credit-worthiness. In the current economic climate, most banks are requiring a minimum of 6 months of on-time payments before they will approve a refinance.

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