I don’t know the exact date, but it was around the weekend after Thanksgiving. I woke up in a cold sweat. 3am. Overcome with the sort of existential dread that only comes in the wee hours of the morning. We were nearing the end of our contract period on my biggest deal yet. And things just seemed off…Before we get here let’s rewind a few weeks.
We had the lender inspection with Bedrock Capital. They sent a third party company. I was there when they arrived at 9 am until they left at 2 pm. We gave them full access to the property and they could get a key to any unit at any time. The weather was slightly unfavorable and they stated they didn’t need to go up on the roofs because they had satellite aerials. The owner had replaced four roofs with 5 years left of warranty and we were assuming the remaining four needed to be replaced immediately. They recommended the four replacements and patching as needed under warranty.
Now with hard money lenders they might tweak their numbers slightly. Not ideal, but it happens. Bedrock called shortly after the inspection and said they wanted to raise their interest rate to 9% due to “age” and increase our reserve $150k for mold found in some of the AC units. That was fine with us as it was in line with what other lenders were offering. When getting lending you always want a bit of room in your underwriting in order to make the deal work.
Fast forward about another week and we were chatting with our attorney. She said it was odd, the lenders legal team had just outright stopped working. She couldn’t get them on the phone and they were not actively responding to emails. Now this was a huge red flag obviously and we became concerned.
I talked again with our mortgage broker. He assured us that the deal would go through and not to worry at all. In the back of my mind though I had doubts. One of the most misunderstood things about large deals is in my opinion how much the lender is in charge of the deal closing. Once you go far enough down a path with them they essentially have way more leverage. If they don’t close the deal they walk away, if you don’t close the deal you lose your hard money and your deal. I was very worried.
Made another call to my mortgage broker he said it was fine.
So fast forward a few nights to where we started our story. Sometimes your body kicks you in the face because you aren’t listening to your gut. At 3 am I awoke and couldn’t go back to sleep. If you run a business or even a stressful job you’ve maybe been here before. You go to “work” but you aren’t extremely productive. It’s more a sense of fear, you know something is wrong. The deal was about to fall apart.