Lending amounts will vary from lender to lender. The overall amount of money in a hard money loan also varies depending on the details of your contract and specified need, but generally falls between $75,000 and $2,000,000 for a residential project. In addition to the amount you can expect, it is critical to understand what LTVs a hard money lender will go up to. A solid, trustworthy lender may lend an entity looking to fix and flip a property 80% of the acquisition cost and 100% of the rehab costs, up to a maximum loan to After Repair Value of 65%.
For example, imagine you find a property to purchase for $100,000 that will be worth $180,000 after investing $30,000 into the rehab. You can expect the lender to lend you $80,000 to purchase the property and another $30,000 to rehab it. However, since a lender like ABL has the loan amount capped at 65% of the ARV, the total loan proceeds will be a max of $117,000. Remember that hard money lenders in Maryland will generally want flippers to have some of their own cash in the deal to insure that everyone has “skin in the game” regardless of how great of a deal you find.
All in all, when considering a hard money loan for your project, it’s important to keep in mind whether yourself, your project, and your time frame will qualify your for a hard money loan. If for some reason you do not meet some of the qualifications discussed above, it may be time to look into other funding options. Hard money loans are well known for their speed and flexibility, and they may be the perfect leverage for you to use in order to avoid the predicament that many house flippers find themselves in when they don’t have enough funding on hand for their desired project.
Readmore What Types of Projects Qualify for Hard Money Loans?