Many commercial and real estate investment deals in the Mid Atlantic region are being financed by lender hard money in Maryland these days. The market may have taken a hit but the result has actually been a surplus of properties that are available at exceptionally low prices. A smart investor with a sound business plan can secure quick financing for the purchase of these properties, rehab them quickly and flip them for a nice profit. In these instances traditional loans are not necessary. They take too long to secure and settle and the borrower really has no need for a 15–30 year mortgage. They just need financing to purchase the house so they can fix it up, sell it, and pay back the loan before they move on to the next project.
Lender hard money in Maryland, Virginia, and Washington DC is not financed by traditional mortgage lenders. It is backed by private institutions or individuals that are looking to invest their money short term for large gains. Their goal is to make higher than normal returns and to get their money back quickly so they can keep it working for them. These lenders will not make loans to borrowers in certain types of situations. They have no interest in losing money so they will refuse financing to anyone that needs the money long term, needs more than 65-70% of the property value, wants it for a primary residence, or wants to invest in farm operations, mobile homes, or geodesic homes. Borrowers that are interested in rehab projects or short term financing to secure a property prior to refinancing for a longer term should have no problem finding hard money available to them.
Backers of lender hard money in Maryland make their money by charging higher interests rates than those seen on traditional loans, and by requiring higher points due up front. The points are equal to 1% of the loan amount and can be anywhere from 4-10. They typically require minimum guaranteed interest periods as well because they like to keep their money working for them, and having it paid back too soon will mean a loss of profit for them. Using hard money is a sure fire way to get financing quickly for the next hot real estate deal, but a good business plan and exit strategy is essential to making the largest profit possible.