The First BIG Loan #21

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The First BIG Loan #21

Bill Fairman (00:04):

Hi everyone. Thanks again for joining us on the show today. My name is Bill Fairman or with Carolina Capital management. This is my lovely sister. Thank you. That’s much better, Wendy. Sweet. She’s also my partner. So today we’re going to talk about the biggest loan we ever did. No, the first, well, the first big long we ever had a lot more bigger than that. So one of the things that we do here is we lend money for people that are doing fix and flips and buying holds and value add new construction apartment complexes. You can find out more information on that at Carolina hard-money dot com when you, the page pulls up, you can either just hit the button that says apply now, or if you just have some questions you want answered, we have an ask an expert tab that you can click on and it’ll just shoot us an email and somebody else will try to find an expert.

Wendy Sweet (01:01):

Yeah, we’ll tell some friends we’ve got a live line or two.

Bill Fairman (01:14):

We had a customer that went into a neighborhood that was really seriously up and coming. You know, we’re in the Charlotte market and this was, yeah, 2012 and the market was just starting and we were approached with, I mean it was a, it was a huge loan for us when we started in business, our average loan size, 60 $65,000 and this one was in our portion of the loan was in the 600,000 range. So it was scary. It was pretty scary for us, but it was a, it appraised for more than we thought. And he was a builder and again, the guy was an experienced builder and he was just moving to a new area and plenty of money in the bank. He had great credit scores. He was a great, really good rescue. So we took the plunge and everything was going, everything was going swimmingly.

Bill Fairman (02:14):

You got the house under contract, right? He did. And it was many bedroom. Well it wasn’t, it wasn’t many bedrooms. He had actually built a library in there and the person that, okay. Yeah. When did buy the house, cut it under contract, took a $10,000 deposit. But that person wanted to take the library and now turn it into a bedroom. So I had to do some extra work, but in some walls, you know, add a closet cause it’s not a bedroom. Was that a closet? Right. And after he completed all the work ready to sell the house, she backed out, see, changed your mind, which is a woman’s prerogative. That’s what we do. And what was the downside for our borrower? Well, he, uh, he, he was stuck with a house that didn’t have the library and now had the bedroom and all that wasn’t mad. He had 10 more thousand dollars leftover, didn’t he? And

Wendy Sweet (03:11):

his loan lasted a whole lot longer than he had hoped it would. And what was the consequences of that? Well, in our market at the time, remember it was just beginning to boil. So the price range of all the houses around were just increasing, increasing. So that was really okay. We’ll just say no. Did we have,

Bill Fairman (03:36):

and that time, I think it was nine months too. It wasn’t, you know, we weren’t doing one on ones. We were doing nine, but his loan was going to have to go into an extension. And when you go into an extension, you have to pay an additional points for the extension of the 90 day period. And two more points. And remember this is a $600,000 house. So that was a pretty 2% of the 600,000 is what it’s costing plus no 12 mortgage payments, which is more than a, continue this now, now go w what ended up happening? I don’t remember.

Wendy Sweet (04:17):

So they can set it all the first time the market was going up. So this guy was falling in,

Bill Fairman (04:25):

he’s making mortgage payments on a house that someone backed out on. He had extra expenses, made all those stupid moving the walls and making the closet $10,000 but they didn’t cover his extension fee. He was mad at us because of the date. And uh, but as it turns out, he ended up getting a contract there shortly after the price was increased by 20,000 because the market was really on a, on an up swing at that time. And then so he ended up making more money and then selling the house and everything was great. Again, that happens in up markets and [inaudible] you have to be careful in anything you’re doing real estate because markets change could had the same effect and market could have gone down and now he’d been upside down.

Wendy Sweet (05:18):

Right. And it’s just as likely that that can happen at anytime and it’s more likely that that’s going to happen these days. Right.

Bill Fairman (05:24):

But my Rose colored glasses, I always want to do the, they are the success stories and not this guy is falling in the story. So this worked out great for him. He still made plenty of money on this thing more than he thought in the first place. And he came out smelling like a real tribe. But as lenders,

Wendy Sweet (05:46):

we were sitting in a great position either way. Sure. Because we knew we were going to get our renewal thing and the market’s still going up.

Bill Fairman (05:54):

Alright. And our investors are protected because when we make a loan we have a typically a 30% or more cushion between the value of the home. And what we live in,

Wendy Sweet (06:07):

and that 30% was increasing because the values were increasing. So that was a really good position for us to be in. If you’re an experienced

Bill Fairman (06:15):

builder or borrower real estate investor, we would love to talk to you about seeing if we can help you on the lending side of things. Now, there’s plenty of avenues for lending in this space where you don’t want all your business. We just want to be one of your tools in your toolbox. We encourage people to look for private lending as well, but private lenders do not have infinitely deep pockets.

Wendy Sweet (06:42):

Well, sometimes people use all of those means for the same deal, right?

Bill Fairman (06:46):

And then at the same time, banks or a good way to go, but banks do not have the speed that companies like ours do. So if you’re interested, again, we said click on either the apply now or ask an expert and we’ll find one for you. Um, you got anything else to add?

Wendy Sweet (07:09):

Can I think of an expert answer? I don’t know. I’ll have to think of.

Bill Fairman (07:12):

All right, so I was gonna, I was gonna throw this to you, but make sure you share in like we have some video archive. Where would that be? When

Wendy Sweet (07:21):

it’s here or here or here or over there?

Bill Fairman (07:24):

Depending on the platform and, uh, what else? Oh, Carolina. Hard-money dot com is the web address where you can find us. We’re bill and Wendy Carolina Capital management. Have a lovely day.

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