Hard Money FAQ

Q: What is "hard money"?
A: Hard money is a term used to describe any financing option which is an alternative to commercial bank lending. For reasons of timing, deal complication, or risk, hard money lenders can step in to provide funds where conventional lenders cannot.

Q: Why use a hard money lender?
A: As hard money lenders' rates and fees are typically higher than conventional lenders, it is important to use hard money correctly. Hard money is meant to be short term bridge financing to help you get into a deal, carry the deal while you work it, and should be taken out relatively quickly.

There are many advantages to using hard money, including:
- Fast Underwriting - We can understand a deal and issue a loan commitment in a matter of days, instead of several weeks with a conventional lender

- Flexible programs - You can use the equity that you have built up in other real estate to help you purchase and renovate your next project, instead of having to use large amounts of your own cash

- Experienced investors- We know Baltimore City better than anyone. We are experienced investors and lenders and can help guide you through the process and avoid many pitfalls. We want you to succeed and make money.

- Access to capital - Conventional banks have tightened up on their underwriting, making it difficult to impossible to come up with the extra capital you need to get your deal done. We are asset-based lenders who are focused on the real estate and the viability of your project as opposed to credit score or the collapse of the sub-prime market. We will show up to the table and your deal will move forward.

- Industry contacts - As long-time investors in Baltimore City, we have many industry contacts to help you along the way. We have pre-approved general contractors, relationships with conventional lenders to help you re-finance, and recommended real estate agents to help you maximize the value of your investment and avoid painful pitfalls along the way.

- Property List - We have a list of as-is properties ready for rehab, which are pre-approved
for financing.

Click here for the list.

Q: How do you underwrite deals?
A: While underwriting is based on many factors and varies on a case-by-case basis, our general criteria include the following:

- Financially Successful Project- We want you to make money on the deal. If we think you can, we’ll probably do the loan. If we think you can’t, we’ll tell you and we’ll tell you why we think you may want to reconsider doing the deal.

- “Skin in the Game” – While we are eager to work with you and be a financial “partner” on your real estate investments, its your deal and you get the upside. We just get our money back. As a result, we need to be comfortable that you are motivated to see the project through completion. We expect our Borrowers to either come to the table with 15-20% of the total deal costs or post additional collateral as a substitute. One of our competitive advantages is our ability to use existing equity in borrower’s additional collateral so that they don’t have to come to the table with large sums of cash.

- Exit Strategy – Whether you’re going to sell the property or rent and refinance, we want to make sure that you’re set up to succeed. For homeowner houses, we’ll help you during the renovation process to make sure that you’re going to have a marketable product for sale at completion and can refer you to professional real estate agents to ensure that you get top dollar on your investment. For rentals, we’ll help you to optimize your rent and put you in touch with commercial lenders who will help you refinance your investment once it is rented.