I am into a deal for $25K but permitting process killed my carrying cost budget. The project is only 25% completed and I am running out of funds. It is a hard money loan. Any thoughts?
I would try friends, family, or other local investors. If you have other assets, you may be able to liquidate some of them to meet your obligations. Depending on your credit & equity you may be able to refinance. Maybe you can work out short term financing with suppliers? If those aren't good options you may need to try to speed up your time line, & contact your lender. Good luck.
Talk to your lender first and let them know the situation. See if they will work with you to extend the terms.
Borrowers are sometime afraid to call their lender with bad news, @Adrian Smalls . Don't wait until it's too late. Let them know now that there are, or might be, some issues. If you have a handle on the problem, your lender might:
- Loan you more money to finish.
- Defer your payments until the end of the loan. Perhaps compounding the interest in return, if legal in your state.
- Modify the interest rate/payments in exchange for an equity participation.
- Extend the loan maturity date to give you more time, though it sounds like that's not the total problem.
Be up-front and honest. Present a plan that shows how you will get back on track. Lenders do not want to foreclose and they do not want the property.
Thanks everyone! I will keep you posted..
Get another Hard money lender to refinance the loan.
Definitely talk to your lender first and see if you can renegotiate the terms. If you have a 401k you may be able to borrow money from it.