Hard money/ Equity for financing??


I am in the process of trying to purchase my first property along with a partner. We are interested in rehabing in the Maryland area. We are currently dealing with the dilema of how to finance our projects.

We were thinking about going through a hard money lender, but he required ratified contracts along with several other documents before even approving us and possibly would give us 100% financing on our first project. That sounded too risky, for if he didn’t want to finance the project we would be up *&^%$ creek.

We were also thinking about taking out equity lines of credit from our homes, to be able to finance our rehab projects. This way if we went with a regular mortgage loan, we would have extra funds to tap into for closing, holding cost and rehab materials.

I guess my questions are: 1. How would you recommend newbie partners go about financing their first rehab/investment?

  1. Is it a good idea to tap into your equity and finance your projects and just repay once you finish the deal?

  2. Can anyone recommend any good hard money lenders or private lenders willing to work with first time investors in the Maryland area? And that offer 100% financing and possibly financing for rehab.

  3. Any advise or information you can give for newbies purchasing their first property, would also be appreciated.


Keke ???

If your credit is good there are many decent programs to utilize for rehab projects. There are also other ways such as private money, etc. It all depends on the scenario which gives you the best leverage with the least amount of risk to yourself and your capital.

I personally would not want to use my own money if I did not have to, but that’s just me. I’ve got a couple of sources that I use and would be glad to share them with you if you like. Just email back and I’ll help as much as possible.


mtgman is correct. there are plenty of lenders out there who lend 100% on an investment rehab. credit is important as well as having a good crew lined up to do the job.

Are you looking to rehab and flip the properties or rehab and hold for cash flow? There’s some low cost options available to cover acquisition+rehab if the property will be held for at least a yr or lease optioned out. And of course some other pricier options to also cover purchase+rehab for a quick flip scenario.

Your best source for financing rehabs is to contact your local community banks. Most local banks will want 15-20% down but you may find a couple tucked away that will base the loan completely off the after repaired value. Meaning that you could get in with no money down.

If the property is in at least average condition then you may be able to qualify for conventional financing. Your credit, income, and assets will determin how much of the sales price they will lend. 100% options are still out there. Your helocs could then be used for fixing up the properties.

There are also rehab loans offered by conventional lenders. Most will require a general contractor to do the work and require investment transactions to be done with full docuentation of income and assets. There are a couple that will do as stated income or no ratio. Many of these rehab lenders will want 10% down. Rehab funds are put into an escrow account and you pay interest on what you have drawn. For properties that you are holding long term these loans will conviently modify into your long term financing when the project is compelte. No additional refinance needed. These loans can take up to 4-5 weeks to complete. The lender not only reviews your profile but also that of the person doing the work.

Your hard money option is a good tool for several reasons. Speed, usually done in less than 2 weeks. No verification of income or assets. A hard money lender should be able to wrap up the payments/costs/fix up/purchase within a 70% arv loan. Since they dont base the loan on credit/income/assets, a full file is usually needed in order to get loan approval. I suspect that is what you are going through now. A preapproval based upon your merits can be given out but they really wont take a look at projects without having substantial info (ie…contract, scope of work, comps, bio, and exit strategy) If you run the numbers and the deal appears to fit then there should be no reason that it wouldnt go through. If this is the route you end up taking, I wouldnt let putting together a full file for them stop you. A good hard money lender wants to see you succeed. Your repeat performance is important to them as well.

Thank you all for the advice and info.

Zachj: We’re planning to purchase, rehab, and then flip.

And we both have good credit, so I dont think getting a loan will be a problem. It just seems as if going with a Hard Money lender would be the quickest and best way to finance the whole project.

Thanks Ivestment loans… Your advise in regards to the hard money lender has given me hope and sheds new light on the full file.

I guess I just would feel better with having a pre-approval in my hands before ratifiying a contract. So we will have to weigh all of our financing options.

How did you guys finance your first projects?

Make sure that there are no Prepayment penalties on the loan. Especially if you intend to flip.