Hard Money Loans: One Family’s Success Story
When Cheryl S. inherited her grandmother’s cabin on the lake in central Oregon, she along with her entire family celebrated. Though they had never visited the cabin before, it seemed like a great place to visit and to perhaps turn into a source of income for their growing family. The cabin was paid off in full. They assumed it would be an easy process to get the cabin ready to rent out to local tourists.
They assumed wrong.
Once Cheryl and her husband flew out to visit the cabin and its surrounding property, they were upset to learn the cabin and the grounds around it were in utter disrepair. All the appliances were inoperable, one bathroom was completely unusable and nothing in the house had been updated since it was built in 1972. All the carpets needed to be ripped out, central air conditioning needed to be added and the deck was completely rotten. As for the surrounding property, a tree had fallen over and crushed the fence, and the pier needed to be replaced.
Cheryl spent the next few days meeting with local contractors and repairmen to see how the cabin could be saved. Once she got her estimates, she was floored with the amount she would need to pay for renovations. She approached her banking institution to apply for a loan but was dismayed to find out how long it would take to get the financing to pay for the repairs. Time was of the essence to get this vacation rental ready by the summer season.
Cheryl then approached a private investor in her area who extended to her a hard money loan within 24 hours. Because the cabin was paid off and the surrounding properties were valued at a very high sum, they offered her 50% of the value of the property. She used the money to make the necessary repairs and updates to the cabin, and the cabin was successfully rented out the entire summer season. Cheryl was able to pay back her loan within a year of receiving it and is now earning income from her rental property.
“Using a hard money lender was the smartest part of our family’s plan to renovate my grandmother’s cabin. Without it, I would never have been able to make the necessary repairs in time for the busy tourist season.”