Key Takeaways
- Contractor default and budget overruns are the most common crisis scenarios in hard money projects.
- When trouble hits, immediately rerun the financial analysis with updated costs and revised ARV.
- Converting a failed flip to a BRRRR hold can prevent crystallizing losses when selling would produce a loss.
- The decision framework weighs: sell at a loss now vs. hold and absorb negative cash flow vs. list as-is.
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Test Your Knowledge
1.In a troubled hard money project, what is the most important first step?
2.When should a borrower communicate problems to the hard money lender?
3.What is a "deed in lieu of foreclosure"?