Phone: 240-436-2340
Maryland Hard Money Lenders. Private Loans in Maryland, Virginia & Washington, DC
Every fix-and-flip deal, no matter how glamorous the before-and-after photos look on Instagram, lives and dies by three stubborn numbers. They don’t care about your optimism, your vision board, or how confident you feel walking through the property with a tape measure and a latte.
Those three fundamentals are:
Fixing and flipping real estate—buying properties, renovating them, and selling them for a profit—can be highly profitable if done right. However, it also carries significant risks if not managed properly. As a hard money lender, we see some of our borrowers building thriving businesses and others giving up after their first transaction.
Trust me, the luck of the draw has little to do with it. What sets a successful real estate investor apart is their discipline in following the best strategies for a successful fix-and-flip investment. The good news is that you don’t have to reinvent the wheel or learn by trial and error. We’ve put together a detailed list of these best practices that is thoroughly reality-based. I can attest that ignoring each item on this list can drain your project’s profits. In contrast, paying careful attention to each bullet point will increase your profits and minimize your risk.
Our borrowers employ different strategies to find homes to invest in. One such strategy is working with wholesalers. While I am personally not the biggest fan of wholesalers, I have to admit that many of our borrowers have made money working with them. So let’s talk about real estate wholesalers, who they are, how they can help you, and the risks of working with them.
Pricing a renovated property for sale is a delicate balance between setting a fair price and ensuring a good return on investment. The price of your rehab should reflect such factors as the current market conditions, the location of the property, the quality of the renovation, and the features of the property. As a private lender in Maryland, I do understand that is often easier said than done. We’ve seen too many borrowers whose properties linger on the market with very little activity, while other investors hit the ball out of the park again and again with the spot-on rehab pricing strategy. So let’s try to unpack the most common mistakes and the best practices for pricing your rehab just right.
The main difference between private and traditional lending is that private lenders base their loans on the after-repair value of the property. In contrast, conventional lenders base it on the current market value. Both the after-repair value and the current market value is ultimately determined by a licensed appraiser. However, the after-repair value is the value that is not there at the time of the appraisal. It’s simply a projection of what the property might be worth once the planned renovations are completed. It’s based on the sale prices of similar properties rehabbed to the same extend our investor plans to rehab hers.
If you are a rehabber, one of the skills you need is to be able to estimate your rehab’s after-repair value accurately. It’s essential in understanding your deal’s profit potential. Make a mistake, rely on wishful thinking or count on appreciation and – poof! – you are lucky to get out by the skin of your teeth. If you are planning to work with a hard money lender, your rehab’s after-repair value (ARV) becomes a part of underwriting. Hard money lenders base their loans on the after-repair value and not on its purchase price or as-is value. So another reason to know how to estimate your rehab’s ARV correctly is to know how much of a loan you can qualify for.
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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 