Cost your property accurately in the changing scenario of hard money loans arizona
Plainly we will discuss here the biggest mistakes made by real-estate investors while they are estimating their valuable assets. Starting with a real time example, we tackled at Do Hard Money Loans Arizona led us to communicate with the real-estate investors community about such grave blunders which may shatter their business in no time. So read the case first;
One of our borrowers came to us few days back and submitted his loan application. He claimed his property’s value is $90,000 and he looked-for a loan worth $65,000 for which we may facilitate him. He delicately completed entire loan application. And then we did our evaluation for his property. For this we sent our two evaluators on the ground.
So in case of above quoted example we sent the evaluators to visit the property for an independent evaluation. After their thorough evaluation they came up with the conclusion that the property is worth $45,000 fixed up loan amount. Quite incredible! The required amount for repair is $45,000. There is a sizeable difference between the two estimations for Hard Money Loans; one done by the borrower and the other one done by our independent evaluators. The difference in amount is exactly the double in calculation by out independent evaluators. So the borrower was more than 50% off on his value. The loan amount they we are able to get on this property is $17,000 because of some other depreciating market and a few more concerning issues.
So in case of above quoted example we sent the evaluators to visit the property for an independent evaluation. After their thorough evaluation they came up with the conclusion that the property is worth $45,000 fixed up loan amount. Quite incredible! The required amount for repair is $45,000. There is a sizeable difference between the two estimations; one done by the borrower and the other one done by our independent evaluators. The difference in amount is exactly the double in calculation by out independent evaluators. So the borrower was more than 50% off on his value. The loan amount they we are able to get on this property is $17,000 because of some other depreciating market and a few more concerning issues.
After repair cost evaluation we look for depreciating market. If the values in the last year depreciated more than 11% then we have to take that additional percentage off when they inquired how much we can loan. So for example, if a property has devalued 20% in the last year we will allow taking 11% so that 9% has to come off what we are able to loan on the property and additional 9% will have to come off. In most areas that is not a concern although.
So principally, we are able to loan an amount of $17,000 while he was hoping to get $65,000, whereas, he thought the property is worth $90,000. Now if this investor would have taken the time to get a property approval and an estimated value he would have seen clearly that property is not worth it, save a whole budget money, whole budget time and whole budget aggravation. And this is really interesting in arizona hard money loans scenario because the evaluators are completely independent. They are evaluating the property objectively. They are not relaying on any information from any party and finally they determine their own value on factual basis.
