Looking for HML or PML in the MD area

39 Replies

I disagree with @Jeffrey H. and @Tom Gimer about hard money lenders not wanting to deal with you because you have no experience. Just have to find the right ones who will give you a chance. They always have ways to protect themselves, mainly through LTV, and may charge you higher fees for that lack of experience. But there are ones who will provide a standard 12% interest and 3 pt loan for as high as 90% of the purchase price and rehab for someone with no experience; you just have to find them. I don't want this message to discourage people from looking.

However, I do agree with the many folks that say you should team up with an experienced flipper to do your first deal.  That's something that, when I look back and reflect, I wish I had done when I got started flipping.  It would have saved me from making so many mistakes that I didn't need to make.  Leverage other people's mistakes and their experience (in order to get better terms for lending).

I did have a partner with me when I started, but we were both new to real estate, so I didn't get all the advantages of an experienced partner.  However, that's still better than nothing because it allowed us to get into our first deal sooner by combining our funds, and for emotional support when so many things go wrong in flipping (as they often do).

@Nghi Le I said it would be tough to find and encouraged OP to partner up for best results. It seems you "disagree" with me but we basically have the same opinion. 

Wait a second... you aren't my wife are you?

Updated over 3 years ago

One additional thing to consider in this thread is Maryland is a judicial foreclosure state. It's not uncommon at all for a foreclosure to cost a lender $15k-20k... so in this state you need to factor the cost of an unnecessary mistake into your analysis.

@Tom Gimer

I showed your comment to my wife and she laughed too :-)

But you're right.  I just wanted to make sure that people weren't discouraged from your post from looking for those lenders.  Sometimes I just use strong words like "disagree" for dramatic effect ;-)

My records indicate that it's more of a nonjudicial foreclosure state?  I just did some Googlin' and Bingin' and it says that MD is both judicial and nonjudicial, but most foreclosures are nonjudicial.

@Nghi Le True. There are lenders out there... borrowers should expect costs to reflect risk/perceived risk.

Oh, you should see how judicial Maryland's "non-judicial" foreclosure process is. At a minimum it should be called quasi-judicial... 

You need to file suit in circuit court, pay filing fees, post bond, file notices and affidavits with the court, obtain an order ratifying the sale, every sale is audited, issues concerning surplus are dealt with by the court, etc. When the rules governing foreclosure have an entire section in the code as well as an entire section of court rules, and you need court involvement throughout... the process is "judicial" in my book. 

@Tom Gimer excuse my ignorance, but would you mind further explaining what you mean by "factor the cost of an unnecessary mistake into your analysis"?  Do you mean that to foreclose on a property, it will cost the lender an additional $15k-$20k to sell the property? If it a common occurrence, is it safe to assume that all Bank ROIs will have this additional cost tacked on to the purchase price?  And you are right, Maryland is a quasi-judicial foreclosure state because the court still has to ratify the sale. 

@Kendra Rodwell Yes. It will cost the lender a bunch of cash to foreclose. Attorneys fees and costs, advertising, trustees fees, etc.

So my point was I believe a lender would prefer to lend to an investor who, when faced with reality, can admit defeat, sign a deed in lieu, and move on to other more profitable projects. With an investor who has their entire savings invested in one deal (a common theme for new investors here on BP) it's much more likely the borrower is going down with the ship if things go sideways. To the lender that means all the expenses of a foreclosure and then perhaps the further expenses of a resale.

Originally posted by @Christopher Haynes :

@Kendra Rodwell  I think that @Joe Norman is absolutely correct  although I would say an AVR of 120k instead I’m only in my second year of full time investing but I noticed that “flips” between 40k and 70k do tend to sit longer my first two flips were like what youre trying to do and they took forever vs a flip that I’ve just completed I had interest even before the house was complex and that was at 137k. Also don’t limit yourself on the budget I’d say that’s one of the biggest things I regret in my first year. I paid a lot of cash on a lot of small deals  ( purchase price 20k rehab 15k selling at 50k to 60k) but if I would have just learned to leverage sooner I could have made so much more . I’m in the same boat as you I’m looking for Hard money to better leverage deals as well as private money just make sure your not afraid of the deal and don’t limit yourself to much 

 Where was your 137k house?  I'm about to list a flip right around that price.  Just curious.

@Kendra Rodwell


The terms you should be looking for with hard money are generally the lender should cover 80% of the purchase and 100% of the rehab (it's paid out in draws).

You can find one that does first time flips, but be prepared to pay a little more than the guy that's been doing it forever.  Your rate should be somewhere around 12% interest only and 3-4 points.  

Pay no money upfront except for due diligence fees like appraisal or a credit report.  No application fee unless it goes toward one or both of those two mentioned.

I would not buy a 5-10K house in Edmondson Village.  That's going to take a monstrous amount of rehab, time and money and it may not be worth what you had to put into it.

I saw a 2 unit property on The Alameda yesterday going for 157K.  It didn't need any rehab, so you could easily house hack it and make money right away.  That's the kind of deals you should be looking at right now in my opinion.

@Stephanie P. thanks for your comment. I have been doing my research on HML and I know that they are more expensive than a conventional lender but they require less paperwork and move faster, which is important for home flippers.

I do not live in Baltimore so doing a house hack is not feasible for me. I want to fix and flip homes, that's my exit strategy. 

As for Edmonson Village, I was only inquiring about the area because at those prices, I wouldn't need to borrow as much money to get a flip started and I would have some experience before investing $30k-40k. But I have already ruled that area out. 

My hope was to find a lender that didn't require a lot of money upfront and would be willing to get their interest and points at the back end of the deal. 

@Kendra Rodwell Congrats on deciding to take the leap!! I was in your shoes not so long ago and seems like you are getting all kinds of great advise. When i made the decision to buy my first deal I did the same as you. I spoke with some HML, I even got prequl by a couple. I also go introduced to Private money lender who was doing 9% and 1% origination and even would defer payments till the end of the deal. I think it is important to have multi lender contacts because as the private money guy explained he might not have the funds when i bring a deal to him so you would have to take it to another PM or HML. Every person i talked with I made sure they understood that i was new and it did not seem to be a problem. The next step is finding the deal. So here is some food for thought. Most HML and PML are putting up their own personal money so it isn't like a bank were they have underwriting guidelines and if it hits all the boxes they do the deal. I took a deal in upper fells to my PML and he turned it down bc he was not a big fan of the city. I presented it to a HML who i had qualified with and he liked the deal alot. So just remember good to have a few different sources in your pocket.

You mentioned your strategy is fix n flip which is great that you are picking a strategy and attacking it. I started out with the intention of partnering. I went to meet ups, even signed up for the Baltimore REIA which does cost money but I was serious about doing real estate so I signed up, but there are plenty of free resources. I always mention to people if they are focusing on fix n flip, Rehabber Pro! Can't say enough good things about them and one of the guys who runs it is a contractor so I am always picking his brain. So my decision to partner came from listening to Brandon say part of something is better than all of nothing. I figured if i could partner I would learn how the whole process works, nuts to bolts, and hopefully the correct way to do it and yes I would be giving up some of my profit but I figured I would probably lose that much in making mistakes just trying to figure it out on my own. So I think you have to make your decision but I dont believe either is necessary better. No matter what you decide to do, make sure you are connecting with more experienced people bc I have never heard of a flip going as planned so you wanna make sure you have people you can call or just bounce ideas off of. I hope to see you posting about your flip soon.

@James A. Thank you for the words of encouragement! I have built up my contact list of HML so I think I am on track. I found two deals and put in my first offer last week on a bank owned property. If all goes well, I should have that home within 2 weeks. I will be sure to come back and update you all on my first flip.

Thanks for recommending RehabberPro! That group is phenomenal. They provide some great information.