Hard Money Lending - Current Opportunity, need advice

[Dakota Mivshek]

Hi There, 

Without getting into a ton of details, my dad (a realtor in Colorado) has an opportunity to buy some condo's that are currently being constructed at 50% expected market value. It is an exclusive opportunity - the developer needs cash to finish the project. i.e.) a condo is being sold for $100k now, and will sell for $200k when finished in 12-18 months. 

Will a hard money lender be an option here? A note that will be accrue and pay interest and principle at the time of sale of the condo?

With this opportunity, it is not crazy to offer a high interest rate to secure a loan. 

Any ideas here?

Thanks!

[Travis Sperr]

Not likely - there are a handful of issues, here are a few:

Lender can't get title insurance on a project that is currently under construction

Buyer can't get title insurance for a project currently under construction 

*I say can't but, maybe can with a lot of paper work, bonds, lien waivers, etc.

Too much risk in knowing if the builder can finish if already in trouble

The lender for the builder isn't going to release units without some principal reduction, unless building with cash.

Your father would be much better off supplying a loan and in return getting the units - although there is a large amount of risk here based on the builders ability to finish.

If the project is 12-18 months from completion, it cant be that far along and the builder is already hurting - that is bad news.