Are you Stuck in a Failed BRRRR? Failed Flip? With Hard Money Rates and Terms Exploding?

Video Closed Captioning:

good morning good afternoon good evening

folks Michael Zuber one red tail at a

time back with the one and only Jonathan

from Convoy Home Loans how you doing

buddy I’m alive and well how are you

hey uh well let’s talk about potentially

helping some people I don’t know if

you’re hearing it but I know I’m seeing

a bunch of people got stuck in Burrs

with hard money or maybe even family

private money that need to get out

there’s a lot of flippers that are

debating whether to try to take a loss

or hold as a rental but again they have

these hard money dates that are really

uh chomping at them uh I’m guessing that

some people are reaching out to you but

let’s let’s talk about saving some

people or at least buying some people

time uh that are caught in some bad

situations what are you seeing out there

yeah I mean it it’s pretty brutal out

there right because think about the

market we just came out of and it became

so hot to do the Burr method or even Fix

and Flip right because everything was

appreciating uh now we’re entering into

a kind of a slowing declining market and

these people that thought they were

going to get all this equity and sell it

are unfortunately not so um I’m seeing

it across the board across the country

uh not just in one market especially for

people that bought with very slim

margins which you would call an

alligator here absolutely yes yeah but

you know those those types of properties

right now their bridges are pretty much

coming up

um is what I’m seeing because they

bought it maybe six months ago or a year


um and they’re only a few months left or

they have to get an extension on the on

the hard money loan

um and you know hard money’s getting

expensive too right yeah we’re we’re no

longer in the seven percent days we’re

now in the if you’re lucky nine percent

up to dude hard money’s 11 11. that’s a

lot hard money’s allowed wow yeah

um but yeah I mean we we still have like

we so right now the biggest problem is


um you know finding a solution to be

able to have clients be able to secure

their property to either extend the time

frame to finish building or to like

extend the time so they’re not like

pinched for the stress of like I need to

do something within a month right

uh because that’s the scariest thing

there’s nothing scary than like a 500 or

200 000 Note coming due at the end of a

month I’ve been there I had a I had an

apartment building where the seller

second uh came due in 2008 let me just

tell you that was a horrible time for a

seller second to come do yeah so I’ve

been there I know exactly I remember

white knuckling having that conversation

because it could have gone either way

thankfully we got a five-year extension

but that was that was one of the most

that was really scary right looking at

an asset that was even in that market

where seven figures and potentially

losing it uh because a seller could have

chose a different ending and uh

thankfully they didn’t want it back so

we worked something out but man

frightening frightening yeah yeah and a

lot of people are in that state right

now and if they’re not feeling it yet


here yeah here’s the little Nuance that

I’ve seen is two different attitudes one

is oh my God I have my time’s running

out I have to do something with it the

other one is uh I have three months

you know if you have three months you’re

you’re late

I mean I I freaked out 18 months in

advance exactly my five years oh this is

crazy exactly so I mean there’s people

in on two sides of that right they’re

like uh three months but you know what I

what I’ve been telling clients is look

three months three months ago was still

  1. three months now is a new year

yeah so no one knows what’s gonna happen

on the change of the calendar year from

2022 to 2023. yeah no one knows at least

for the end of this year we know rates

are going to go up you know there’s

volatility whatever that we it’s

expected what happens in 2023 no one

knows no one knows yeah so yeah I’ve

been telling you know I’ve been telling

clients like look hey you know I

understand you feel like you have a lot

of time because you have three months

left but three months is not that long

you know

just remember this three months has

Halloween Thanksgiving Christmas New

Year’s you’ve lost like I don’t know

whatever it is 17 days it’s not really

three months it’s like two months it’s

just exactly it’s not good it’s not good

exactly exactly so you know what what a

lot of those clients I’m I’m like

encouraging you to do even though it

sucks I know it sucks

is if they cannot sell the property you

have to find a solution now you got to

get a Band-Aid yeah a tourniquet because

again I’ve I’ve told people that there

was a buddy of mine who was worth 10

million bucks legit flipping big homes

in in the Bay Area in the last crisis

and he didn’t take a small loss because

he thought he could Band-Aid it together

and that one decision uh caused

bankruptcy divorce and you know pretty

much loss of everything so again

sometimes you got to take a small L you

gotta you gotta put the tourniquet on it

so it bleeds slowly so you can buy time

till next like for some of you you got

to just pretend and get to you got to

get to March or April winners here

recession fears buyers this seven

percent rates whatever it is you’re like

dude I got to get to March how do I get

to March and uh yeah you’ve got to do

something exactly and you know a lot of

these uh Prime money lenders that if you

have like six even six months left on

your 12 month term

you know usually you know you’re running

out of time you better you know figure

it out now it’s bet it’s gonna be better

to pay a little more to do it now I

agree and extend it out a year because

now for a year from now with October of

next year even then to like oh I’m gonna

do it maybe three months later or two

months later there’s no point in waiting

right now we talked in the first video

about if you like it lock it this is the

same situation if you like it and you

know you can’t do anything with it right

now put the Band-Aid on it slap it on

there rub some dirt on it take the pain

for a short period of time and then you

refi out of it or sell it later but this

that’s the only solution right now it’s

funny you asked me what I’m doing in my

business in episode number two and I

actually told you step one is I got

prepared I I

no I I had no idea rates would be seven

I called seven by the end of the year I

had no idea what happened in late

September but I knew it was coming so we

got prepared early folks you’ve you’ve

got to remove risk and for me interest

rates are one of the biggest rates short

term Dave Ramsey the most conservative

investor on the planet busted out

because he was using 90-day debt don’t

be Dave Ramsey

yeah exactly so you know right now what

the solution for a lot of my clients or

people that have reached out

um all right or not because a lot of

what we’re at subscribers are actually

very educated and a little more smart

with their money which is you know which

is more conservative I hope yeah yeah I

think so I think so they’re all they’re

all aspiring to be the Warren Buffett of

uh of real estate

um so but you know right now if anyone’s

in that situation it’s um you know find

a solution now

um we still have you know bridge and you

know all that all those terms that it

you know I’d say nine you said 11

earlier but we’re still in the nine to

nine I don’t care I don’t consider you

hard money I consider you non-comm so

hard money yeah yeah hard monies yeah

yeah yeah so we’re still in a nice

attempt which is you know it’s all

that’s a crazy rate but it’s actually

not really it’s not about the rate it’s

about getting to the other side exactly

exactly and I love that you you

accentuate that because that’s very


um but you know right now we’re doing a

lot of bridge programs to be able to

allow them to Gap the you know the year

uh get past 2020 to 2023 because no one

knows what’s gonna happen at least by

that time because who knows in 2023 when

you try to do something rates might be

at 13 on the same thing that you’re

trying to do now so yes it might be a

little more expensive now yes you might

a little more points but it’s going to

be worth it for the Peace of Mind

knowing that hey I have that time till

next October potentially or next

November potentially to be able to do

something with it whether it’s sell it

or keep it and the most important part

whenever you’re doing these things is no

prepay on these short-term loans no

prepay there is please no prepaid yeah

please because you do not know what’s

going to happen in the next 12 months no

one knows what’s going to happen so no

prepay it’s the main thing right even if

it’s a little higher rate no prepay

because if you there’s no point if

especially if you’re not going to keep

it long term if you know it’s going to

be a short-term deal no prepay 12 months

just get it done secure it in which is

what I’m telling a lot of clients right

now just do it right now while rates are

still here because no one knows what

it’ll be later it’s a small price to pay

now for the for the pain the massive you

know increase in rate and payments that

you might have to do later so I totally

agree that’s that’s the main focus for a

lot of people that are stuck in bridges

and a lot of times I I said it on the

channel multiple times but see periods

from like you know if they’ve listed it

on sale a lot of these dscr non-qm

lenders have internal rules that say you

cannot do anything for three to six

months after you’ve listed it for sale

so that’s something nobody talks about

no normal loan officer is going to know

what you’re talking about they’re going

to tell you oh no we’re good and then

they’re going to put you in process

you’re going to go for four months and

wait there because all they were doing

were they were actually waiting for the

seasoning period to hit that they didn’t

know about at the beginning

so you know we have lenders that’ll

specifically do it without a seasoning

period with three months only you know

the options are just there right that’s

that’s our main focus is to provide

options but it’s very important that you

guys understand that if you’re if you

listen to something if you’ve you know

done something to the property there’s

always seasoning periods attached to it

so do not ignore those season periods

take no prepay if you’re going short

term if you’re going long-term seasoning

periods seasoning period seasoning

period it’s very important yeah I love

this advice folks if you’re out there

and you’re stuck in something again

don’t be Dave Ramsey and bust out with

short-term debt don’t once one Domino

Falls it gets really hard to stop that

momentum again Dave Ramsey was a

millionaire back in the 80s when being a

millionaire was cool uh but he lost it

all because of short-term debt don’t

don’t be Dave Ramsey if you’re in that

situation reach out to Convoy how do you

want them to do that email Private

Client at convoyhomeloans.com and please

let us know here for more at awesome

thanks buddy yeah thank you

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