There are several unpredictable factors that can delay the completion of your project. The worst thing you can do when you realize you are not going to meet this deadline is default your loan. Knowing how to act when these situations arise can save you money, avoid harsh penalties, and prevent you from potentially losing your investment via foreclosure.
Below are 3 steps to take if you find yourself in this situation:
1. Request an Extension from your Lender
As soon as you realize you are not going to meet your timeline notify your lender. The more advanced notice you can provide them, the more willing they are going to be to offer you an extension. Don’t hide, we repeat don’t hide! The key is to be very up front about the situation and realistic when letting them know how long you will need to complete the project. Typically, these extensions do come with a cost, but they will allow you to complete your project and hopefully sell for a profit.
2. Refinance your Project
In some cases, the lender will not be willing to extend the loan. Knowing this in advance, prior to extended maturity will enable you to find another lender and avoid the penalty fees that you will have on a defaulted loan. Penalty fees will end up costing you more money than refinancing.
3. Sell Your Project
Ideally you will be able to receive a loan extension or refinance your project. If the cards do not play out in your favor, your best option is to sell your project; hopefully recouping all of your money and luckily some profit. Although, when you are in these kind of situation breaking even is still a good proposition than losing money.
We at Washington Capital Partners understand that situations might arise. We have helped our clients with extensions and refinance new clients. Additionally, our network of investors enables us to step in and help you make the connection if you need to sell.
Ideally all projects will go as planned, but it is hard to plan for what the future will bring. If you find yourself in a sticky situation, give us a call!