Revitalization Loan Program in Maryland?

Question

I am looking into revitalization/jumpstart programs in Maryland. I'd imagine Baltimore City would have a few of these organizations that are offering favorable loans for complete project costs (property cost + rehab). I've found a few offering 85% LTC at reasonable interest rates. Usually there is a timeline around 12 months to flip or refinance.

Does anyone know any revitalization organizations in the area offering these types of loans?

Stephanie P. · Answer

Regular mortgages are amortized over a period of years.  For example, a 30 year fixed is amortized for 30 years. The interest is "front loaded" meaning more interest is paid at the beginning of the loan and more principal is paid at the end.  On a $1000 principal and interest payment, you may pay $900 in interest in month 1 and only $100 in principal and the reverse in month 360.

Hard money isn't like that.  It's simple interest meaning you pay no principal and all interest for the life of the loan, but it's a very short life; generally less than a year.

Stephanie P. · Answer

That part of lending is for hard money.  Usually it's about 80% of the purchase price and 100% of the renovation amount paid out in draws.  It's not for owner occupied and it can be expensive, but it can be rewarding as well.  It's really incumbent on the investor/buyer to buy the property right, manage their project and have an exit strategy; whether it's buy and hold or fix and flip it doesn't matter, but don't hold onto the hard  money too long because it's expensive.

Stephanie

Stephanie P. · Answer

@Ben Safren

Most local banks have access to community lending programs and there are lots of lenders out there that will do FHA 203K and HomeStyle Renovation programs.  I'm assuming you're looking for owner occupied.

If not, you can get, with some experience, 90% on the purchase and 100% of the rehab if you're max 70% ltc after the renovation is complete.  Then you can either refinance it into a long term financing product or sell the property for profit.

Maurice E. Stokes Jr · Answer

@Stephanie P. Thank you, wow you know so much information!

Maurice E. Stokes Jr · Answer

@Stephanie P. Hello, can you explain more into the second part of your reply or refer where I can learn more about that type of lending?

Bill Rich · Answer

@Ben Safren there a lot of great renovation programs out there.  The FHA 203K is a program that allows for as much as 110% of ARV and the Fannie Mae HomeStyle allows for up to 95% LTV of the ARV.  If you have any questions please feel free to ask.

Revitalization Loan Program in Maryland?

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