ALL ABOUT COLLATERAL
One man's meat is another man's poison.
Collateral must have real value to either the lender, the borrower, or at least one buyer.? If not one of these three is willing to buy it at foreclosure it is worth NOTHING.
The best collateral is worth more than 100% of the loan to the lender.
The second best collateral is worth 100% to a borrower that has the reasonably certain ability to keep it.
Urban multi family buildings. in fact most urban anything, most commercial properties, half build single families are worth nothing to me. For the most art I would not take them as free and clear gifts.
Nine out of ten real estate investors are standing on a banana peel. The value they put on collateral is meaningless: in adverse times they have no ability to keep it. A person living in a home with ability to pay and without excessive debt owns valuable collateral even if nobody else really wants to own it.
As for hoping to sell collateral to a third person that is essentially the same thing as in the worst case having to buy a speculative property with the intention of reselling it with no certainty of getting any profit from the sale, a fool's bargain.
A lease important to a business making a lot of money is excellent collateral.
A mortgage on a C or D low end tenant occupied residential property is terrible collateral: few people are able or willing to manage these properties.
PL Goduti
781 608 7306
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