Real Estate Lending with John Femenia

  Here is a case study on how we turned our worse deal into potentially our best deal!   We funded a large fix and flip loan on a property in Siesta Key, FL. We provided a $1.9 million initial advance and construction holdback of $150,000.   The purchase price was $2.5M and the After Repaired Value was just about $3M.   The borrower was a group out of Miami.   They were supposedly experienced borrowers, but they were new borrowers to us.   They weren’t the best borrowers to say the least.   About 3 months into the loan, they stopped making payments.   Most borrowers that go into default find a way to get the project back on track.   We just knew that this group wasn’t going to fix the situation.   We didn’t wait to file a foreclosure.   We went after them hard and tried to pursue our pledge of equity.   In the event of a default, the pledge of equity allows us to go after the shares of the entity that owns the property.   It gives you more leverage than a typical foreclosure because yo