How our best borrowers are planning exits in today's market

We just closed our 8th loan of Q1 this week.

The borrower is an experienced operator we've worked with three times before. Every deal has been profitable. Every payoff has been on time or early.

What makes this borrower successful isn't just their construction experience or contractor relationships. It's how they plan their exits.

Here's what the most consistent operators in our portfolio do differently, because it directly impacts profitability.

What Our Top Performers Do

The operators who consistently hit their profit targets all plan the same way:

They budget 90-120 days to sell post-rehab. Phoenix metro average is 66-74 days on market right now, but our best borrowers plan for 90-120. It gives them room to price right and wait for the right buyer rather than getting desperate at day 60.

They price to sell in the first 30-45 days. If comps support $625K, they list at $609K-$615K. This generates early activity and often leads to multiple offers. The extra $10K-$15K they might have gotten by pricing higher isn't worth sitting on market for an extra 60 days.

They have reserves to weather timing. Our most successful borrowers keep 10-15% of their all-in cost in reserves. If the property takes longer to sell, they have liquidity to cover the extra holding costs without stress.

They work backwards from their exit. If they need to be out in 8 months total, they plan 4-5 months for construction and 3-4 months for sale. This ensures they're not rushing the rehab or making pricing mistakes because they ran out of time.

A Real Example From Our Portfolio

One of our borrowers closed a deal in Tempe in November.

• Purchase price: $385K

• Rehab budget: $70K

• ARV: $595K based on solid comps

They finished the rehab in mid-February and listed at $579K, slightly below comps to generate early interest. The property went under contract in 28 days with two competing offers. Final sale price: $585K.

They netted $115K after all costs.

Here's what made it work: they budgeted for 90 days to sell and had $50K in reserves. When the property sold in 28 days, it was a bonus. If it had taken 90 days, they were financially prepared.

That's the difference between planning for success and hoping for success.

How We Support Your Exit

When we underwrite your loan, we're thinking about your exit from day one.

Conservative ARV analysis. We use an internal valuation specialist on every property. We pull recent sold comps and price conservatively. This protects both of us from over-leveraging on optimistic assumptions.

Realistic timeline expectations. We talk through your exit timeline during underwriting. If you're planning 60 days to sell and we think 90-120 is more realistic, we'll tell you. Better to have that conversation upfront than discover it later.

Flexible payoff terms. Our loans are structured to give you time to execute. If the market takes longer than expected, you have room to wait for the right buyer rather than taking a lower price out of desperation.

Local market insight. We fund exclusively in Arizona and watch the market daily. If you're underwriting a deal in an area we think is softening, or if we see opportunities you might not be aware of, we share that information.

What to Do If You Have a Deal Coming Up

If you have a property in contract or are evaluating a new opportunity, here's how to plan for a successful exit:

• Budget 90-120 days to sell post-rehab and build those holding costs into your pro forma

• Look at what actually sold in the last 90 days, not what's listed, and plan to list at or slightly below the middle of that range

• Keep 10-15% of your all-in cost in reserves so you can wait for the right offer instead of accepting a lowball out of desperation

And if you want to talk through your exit strategy before submitting a loan application, reach out. We review deals regularly and can give you honest feedback on whether your timeline and pricing assumptions are realistic.

Submit your deal at weare42solutions.com or reply to this email.

Devon

P.S. Our most successful borrowers treat us as partners, not just capital sources. They share their deal strategy, ask for feedback, and plan conservatively. If that sounds like how you operate, we want to work with you.