Phone: 240-436-2340
Maryland Hard Money Lenders. Private Loans in Maryland, Virginia & Washington, DC
Financial scams are life’s unfortunate reality, and hard money scams are no exception. As the hard money industry matures, the number of entities that engage in questionable ways of doing business goes up. Unscrupulous practices might range from false advertising and interest-rate bait-n-switch to collecting substantial upfront fees and then refusing to fund a loan.
I had a conversation with a potential borrower a couple of weeks ago. She called in panicked: her closing date was fast approaching but her lender has stopped returning her phone calls. Can we possibly help and close her hard money loan in ten days? A ten-day closing is never an issue so I was optimistic that we can ensure a timely transaction. Until we’ve started digging deeper.
As a local hard money lender, we’re all about sharing our expertise and helping you make money in real estate. We love both learning – and every real estate transaction is a unique learning opportunity – and sharing life’s lessons. Many of our borrowers are the first-time flippers and the vast majority will make respectable profits rehabbing their first property. Yet, real estate investing is not for everyone. Here are the four tell-tale signs that private lenders like us use to differentiate serious first-time investors from those who might not be worth the risk.
In our previous blog, we’ve addressed one of the most frequently asked questions: Is a hard money loan considered cash? Now that we’ve covered when a hard money loan is equivalent to cash and why, it’s time to discuss their differences. In other words, should you pay cash for an investment property or should you borrow money instead? To come up with a strategy that is right for you, let’s discuss the advantages and disadvantages of each way.
Recently I spoke to a brand-new investor who asked us to look at a loan scenario for him. A deal he wanted to discuss was not particularly strong. In fact, my numbers showed him making just over $6,000 in profit. After we talked more, he confessed he was thinking about purchasing the property all-cash, to “test the waters” and “eliminate additional expenses.” Were he to bypass a lender and pay his way with his own cash, his profits would increase substantially.
The DMV market is full of real estate investment opportunities that state: Investor Special. Cash Only. This “cash-only” requirement is the driving force behind the most common question about our industry: Is a hard money loan considered cash or not?
I understand the source of confusion. Cash implies a certain amount of money that you already have in your possession. In contrast, a loan means that you’re using borrowed funds because you either don’t have cash or choose not to use it. Hard money loan is not cash, but there are instances when it’s considered its equivalent. One of those instances is making an offer on a distressed property.
In our previous blogs, we discussed renovations projects that might require getting permits as well as the situations when you can get away rehabbing a property without them. Getting permits will almost inevitably slow you down. It will also add an extra layer of expenses to your budget. On the other hand, not getting permits when required increases your risk and, ultimately, your liability. A building inspector might not only halt your whole project until the right permits are in place but also ask you to bring your existing renovations up to code. However, the focus of this article is not to dwell on when to get permits but how to effectively manage renovations that require permits.
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New Funding Resources, LLC
806 West Diamond Ave.
Suite 340
Gaithersburg, Maryland 20878
Phone: 240-436-2340
All loans subject to our review of underwriting criteria and conditions. We reserve the right to approve or deny any loan application based on our sole discretion.
New Funding Resources 