Is Your Scope Of Work Appropriate For Your Proposed Exit Strategy?

[Account Closed]

Here's another tip for working with hard money lenders. 

Do your best to make sure the scope of work is appropriate for your proposed exit strategy and it is all inclusive of the real needs of the subject property based upon your exit strategy.

Rehabbing a property is a common reason a borrower looks to a hard money lender for a loan. Many traditional banks and lending institutions don’t want to lend on properties needing work, especially if the work is more than cosmetic in nature.

How does an investor determine the estimated scope of work on the subject property? There are a number of common ways.

One, the investor looks to a contractor or several contractors to provide a bid(s).

Two, the investor does his or her own bid and estimation on the property.

Three, the investor relies on another person such as the real estate agent, property manager, project manager, etc. to provide a scope of work. This happens most often when the investor is out of state from the subject property.

Do you have hard money loan questions or tips?