What's the Fastest Way to DESTROY Credibility with a Private Lender?
This week I received a private money funding request for a townhome in Pittsburgh.
The email came with a 13-page PDF presentation. But that's not the problem.
The project requires $180K. They're ASKING for $180K in funding. That's challenging, but not a deal-killer.
They plan to acquire for $110K, rehab for $70K, and expect an ARV of $425K. Hold on there, Sparky!
Seriously?
So, I do a little digging in RedFin and can't find a single comparable sale over $200K anywhere within a half mile of the property.
But, their presentation claims 4 comps for $425K each. So I ask the operator for details.
And HERE's the punchline:
❌ Turns out ALL four "comp" properties are on the same block...
❌ ... in a completely different Zip Code from the subject property...
❌ ... across the Ohio River and two miles away by car!
❌ And, to top it all off, that $425K sale price was for the purchase of an entire BUILDING of seven (7!) townhomes!
Yes, this "DEAL" is officially TOAST!
But, tragically, so is the reputation of the operator who sent it.
Because, anyone can make a mistake. But this is real estate investor MALPRACTICE!
I count at least FOUR major valuation Red Flags that should have SCREAMED "Trouble!" to any serious operator.
This is toxic carelessness, pure and simple. And that sounds like nails screeching on a chalkboard to private lenders.
It's the equivalent of a chef preparing a delicious chocolate cake using BROWN SHOE POLISH instead of frosting. It's sliced and served and you take a big ol' nasty bite!
You'd never visit that restaurant EVER again, right?