Hard Money Loans for Properties With Code Violations
Hard money for code-violation properties — what to present lenders, how zoning counsel clears title encumbrances, and how rehab budgets absorb the fixes.
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Video transcript
Lightly edited for clarity.
For properties with code violations on title, here's what you need to present to the lender in order to get it to the closing table. Generally speaking, there's cases open for each of those code violations — a complaint was filed by the city and title was encumbered.
If you haven't already, you need to get an experienced zoning attorney or real estate attorney who's familiar with these cases, and get them to make an appearance to understand the status of the case. Most of the time — and I say most generally, just to put the disclaimer in there — they are minor infractions that once cleared, the city will dismiss the case.
So for a lender, if those items are included in your rehab budget, they will likely — and at least for us, right? I'm not talking about everybody — but they will likely be okay with funding the deal, given that the case requirements are pretty clear to clear those violations.
Violation deals are very profitable deals, because a lot of people do not know how to navigate the mechanics of it, and therefore you can make a lot of money if you're buying at a deep discount.