I am needing some help with an offer. Someone wants to borrow $70,000 for 6 months at a 10% interest rate. The collateral is a lot, according to the tax record the lot is worth $100,000.
Advice, suggestions, feedback.
Any help would be great,
@Luke H. Get the lot appraised to find out the FMV (not tax value which can be quite different). Even if it's worth $100k, that's still dicey. I'd take $70k in cash over a $100k lot any day. Lots aren't always the more liquid things to move in a hurry.
I wouldn’t lend money on a vacant lot. Make sure you’re in first position
How would you feel if you ended up owning the lot? Would you be happy to own it at $70k
not a great deal compared to buying 5 year term first trust deeps on performing rentals that pay 9 and 10% and you get paid off in 6 months then what .. no return.. until you find another deal so your drag on money turns your return much lower.. now if it was 10% or 7k over 6 months that would be something to think about.. but not an interest rate for such a short duration.
Why 6 months? What is the borrower's exit strategy? Will they be selling? Are you sure? Have they been trying to sell? If so, for how long? Are you willing to stay in the deal if the lot isn't sold? Will you be receiving payments during the term of the loan? What will you do with the lot if you foreclose on it?