Managing Downside Risks
Good afternoon everybody, I’m Brian Athey, President of Congressional Capital, and I am here today to talk to you about the most important thing in any Real Estate deal - which is protecting yourself from Downside Risk.
One of the most important things you can do in protecting yourself from downside risk is picking the right hard money lender. Why does that matter? Because the right hard money lender knows how to protect you from the known downside risk when doing development deals.
In fact, when our borrowers call us we ask them 3 specific questions designed to get at the risk level in that deal.
The first of those questions, Is there a chimney on the adjacent property? And is it within 10 feet of the property line? The reason that matters is because if there is and they want to go up a level, they need a chimney extension agreement with the neighbor. If they don’t have one of those agreements or aren’t in the process then we are not going to do the loan. Why? Because we want to protect them from doing a bad deal and protect us from being in a situation where the borrower can’t harvest the value that they need to harvest from the deal to make it work for everybody.
So, what you need to do is find a lender that actually knows real estate development, funded a lot of loans, can look for risk to help you, and can help you make your project be successful. So, if you are looking for a lender that can help you, give us a call we are here for you and we are looking forward to doing great deals with you in the future.
Thanks a lot!