EPIC is not a Hard Money Shark
Uneducated investors, and even some educated ones, are sometimes under the impression that hard money lenders are just out to take their property. Although I can’t speak for every hard money lender out there, I can assure you that acquiring your property is not at all our goal here at Epic Impact Investors.
Our purpose, our mission really, is to help build wealth in communities of color and to close the wealth gap. When a borrower defaults on their loan the hard money lender may make the difficult decision to foreclose on the property. Although this is part of the terms of the agreement and it does protect the investors, it is certainly not our goal at Epic. Nor is it our first, second or even fifth option. We want the borrower to complete the property and the investor’s money returned – we have no interest in engaging in judicial proceedings, it is truly our last resort after the borrower has decided to not move forward to complete the project and disengages.
We want a successful project for everyone involved, the borrower, the capital investor, Epic, and the community as a whole. We take a lot of steps to help ensure that the project doesn’t reach the default stage. We work closely with our borrowers through every step of the loan.
Constant communication is key. We are in constant contact with the borrower, in part to make sure that the money doesn’t get ahead of the construction. We want to make sure our investor is not overexposed in the project which could put their capital at risk.
Keeping those lines of communication open with the borrower means we are able to tell sooner rather than later that there might be issues. This early warning allows us to start preparing to provide additional support to the borrower.
Additional support doesn’t necessarily mean additional money. Instead, we might grant an extension of time. We might need to provide some recommendations to help the borrower find a new contractor.
Unfortunately, it sometimes happens that a borrower just cannot complete the project. Maybe they had something major happen in their life that prevents them from finishing, maybe the partner they were working with has left, the reasons may vary but it may happen that, even with additional support, the renovations cannot be completed.
After turning over every stone trying to make the project a success but the borrower still defaults, it is the hard lender’s right to foreclose on the property. As the hard money lender we do have an obligation to get our investor’s capital back, at a minimum, and their interest.
Foreclosure and taking the property was never the goal, it is an unintended consequence because the borrowers could not complete the project. We aimed for success by providing extra support, by trying not to over-burden the borrower. It was never our goal at Epic to take the property.
Yes, there are hard money lenders out there who are sharks, those with the main goal of going after your property. Luckily they are few and far between! Borrowers should be cautious though to investigate the lender to find out their reputation. Learn what the lender’s mission is, what goals they have when as a business.
Nobody wins when the borrower defaults and loses the property back to the lender. There are more extensive consequences that we are concerned about at Epic. An unsuccessful project impacts the capital investor, the community, and the borrower.
The capital investor was passively investing in our communities, they have a good heart, and they understand Epic’s mission, they want to support what we are doing here. When the loan defaults then the investor, a Black person like you and me, are at risk of not getting their investment back. Once we’ve gone through with the foreclosure they will probably get their investment back but the principle is at risk and they are likely not going to get the interest they expected from our agreement.
The community suffers too. One of our mission goals is to build wealth in communities of color. An unfinished, vacant house doesn’t help the community in any way. The property could end up being an eyesore, a safety concern, or other problem that takes away from the overall value of the community. We want a completed house so a black family, a brown family, a family of color, can move in and continue to build wealth while adding value to their community as well.
An unfinished project can affect the contractors and sub-contractors in the community as well. How much time and materials does the contractor have in the project? Where did the contractor leave off in this project? Sure, this minority contractor might be able to go and find another project but they may still not be paid for the work they’ve already done on this failed project.
The borrower ends up with a default on their credit. This can spell disaster for many flippers or developers since they might not be able to continue with projects in the future.
We don’t want any of these unintended consequences. This is all in opposition to our goals of building wealth in communities of color, of helping our communities thrive. If we’ve tried everything to help them and we’re left with the last option of going into foreclosure, we’re not happy. We’re not excited. We don’t set out to acquire property and it’s not our goal at all.
The impact of unintended consequences that happen to our communities of color can be worse than just the potential loss of the immediate investment. It is never our goal to take any type of project from our borrowers. If we end up at the point of foreclosure, trust me when I say that we have already tried everything we could with that borrower to avoid this end.
We are hard money lenders, rehabbing properties is not our business. We do not want to have to finish a renovation, that is the borrower’s responsibility. We’ll try to give them the resources, the tools, the referrals, whatever we can to help them finish but, sometimes in the end we still end up at the point of foreclosure.
We are not flippers, we don’t want to own and flip property. It is not our goal to put the borrower in such a situation that we end up having to take the property. Our business is to make loans, earn interest on those loans, return the money back to the capital investors. That’s our business model, not buying, renovating, or selling real estate.
We are not sharks here at Epic Impact Investors, we are hard money lenders with a heart for the community. We want to see people of color build wealth and close the wealth gap by investing in real estate. We don’t want your property, we want your success!
If you have more questions, we have plenty of resources for you. In addition to these live video presentations every Wednesday in our Facebook group, we have downloadable guides. The EPIC Impact Investors website is where you can get your Capital Investors’ Essential Guide after you schedule a free 15-minute consultation where we can discuss your questions regarding capital investing. Potential borrowers can also get our guide “7 Steps to Guaranteed Hard Money Loan Approval” by clicking here.