The thought of making money can be intoxicating. It can make people believe nothing will go wrong or could go wrong. So to get the ball rolling, they use Hard Money Lenders in California rather than banks to fund multiple projects. But then the unexpected happens and trouble ensues.
Hard Money Lenders California–After you pound out the details of your business plan, it is easy to envision success. It is easy to see your plans being carried out and all the money you are going to make. So, when it comes down to getting started, it is not hard to be too excited and try to do too much. Your plan I spot on and can’t fail so why not hit the ground running?
Easy—because you never know what is going to happen. All sorts of problems can arise that make the best project turn into a dud. Sometimes, when one turns into a dud, there can be a domino effect. As you work to save one, you neglect the other, and it too fails.
An Investment Tale With Hard Money Lenders in California Gone Wrong
Bob and Jim are best friends living in Santa Barbara, California. After going to a weekend seminar on flipping houses, they feel confident that they can succeed and make a lot of money flipping houses. So, they call a friend in the real estate industry, and she presents them with three properties that would be perfect. They can’t make up their mind which to take so they decide to take all three.
After all, they know what they are doing so what can go wrong?
The deals have to be done now and can’t wait for a bank loan to be approved, so they decide to go with hard money lenders. Both recommend the friends stick with one house at a time, but they are determined to follow through on all three.
They complete the first one, but it takes longer to sell than they anticipated—and the offer was for a lot less. The buyer insists that a couple of repairs be made as well. With the cost of the additional repairs and the lowball offer, they end up only making a few hundred dollars.
Before they got to work on the first project, they gave a contractor a check to do the work on the second. After finishing the first, they go to inspect what they think is going to be a finished project to find out the contractor ripped them off. So now they have to pay another to get the work done. Upon completion, they find a buyer, but thanks to the first contractor, half the profit is eaten up.
At this point, they are not as excited, but neither likes to quit, and they want to see the final project through even though they are behind on every timetable they created. They find someone willing to take it off their hands as is, but they are going to lose a few hundred dollars.
Determined to succeed, they push through. The project takes longer, it costs more, and they end up taking a loss just to get rid of it (and the interest on the loan).
And The Lesson Is…
When you get started in real estate investing and working with Hard Money Lenders in California, take it easy. Don’t try to do too much too fast. Take your time getting your feet wet, so you don’t end up regretting it in the end.
Dennis Dahlberg Broker/RI/CEO/MLO
Level 4 Funding LLC Private Hard Money Lender
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701
About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.