While not all Colorado hard money lenders may look this closely, the investor borrower can lose profits or even lose money when the after rehab value is lower than they expected. As a private Colorado Hard Money lender interested in having successful repeat borrowers, here are some of the factors that are frequently overlooked that may result in a lower after rehab value (i.e. sale price) that we consider in our after repair value estimate:
- Small first floor relative to other houses in the area (and comparable properties used for valuation)
- Low bedroom and bathroom count on the first floor relative to other houses in the area (and comparable properties used for valuation)
- Small master bedroom
- Relatively high traffic street where a family may be uncomfortable allowing children to play
- Nearby noise pollution (e.g. fire station within ¼ mile, close to a busy road, etc.)
- Visible eye soars from the property (e.g. direct views of trash dumps, industrial parks, etc.)
- Downwind issues (being close and downwind from trash dump, sewage treatment plant, factory, etc.)
- Being in flood plain or having bad drainage characteristics on the lot
- Garage or parking is not as good as the comparable properties used in the valuation
- Difficult to access (e.g. large blinds spots from driveways, steep drive ways, etc.)
This is not a complete list of all factors that may result in lower property value, but represents factors we frequently see overlooked.