Quote from @Alyssa Balam:
My husband and I acquired a rental property in 2023 with hard money with the intention of rehabbing the home and renting out the 3 units, refinancing and paying back this short term loan.
Unfortunately the ARV we relied on was significantly off and we have been stuck paying a high interest payment on this loan for months. We've tried to sell the property outright with no luck and would only be able to refinance if we put about $80k down.
Basically, we’re at the end of our rope with the place. Thoughts on (1) biting the bullet and starting the foreclosure process versus (2) waiting it out and trying to sell the property (at a loss)? No one putting in offers at our break even selling price.
Note: All units are leased out currently and the total rent is currently equal to the interest payment we’re making so we’re at a break even but obviously can’t do this forever.
Also, the lender won’t take back the property in leu of payment-we asked.
I saw your previous post about a year ago as well. This is NOT to pile on as hindsight is 20/20, but maybe some one else reading this will see this and avoid this same mistake.
A hard money lender who does NOT require a "subject to" appraisal (which is an appraisal done with your scope of work in hand, and the appraiser gives you the after repair value) is 100% NOT doing you a favor. at all. Sure, it allows you to close that much faster and saves you a little bit up front. But, obviously, this scenario has already cost you a ton.
I have borrowers tell me all the time that "other" lenders do not require an appraisal. Ok, fine, but I am not interested in foreclosing on you or taking your property back. I want to know the numbers but I also want YOU to know the numbers. Get an appraisal from a disinterested party. Sure, it will take a few days but worth its weight in gold.
