Construction Loans in Maryland
The majority of hard money loans deal with either fix and flip projects off the or give you the capital you need to move forward with a new project while you wait for your last renovation project to sell. But not all projects are renovations - what about when you want to build something from the ground up? Is there a hard money loan dedicated to building new commercial or residential properties?
In short: yes. Real estate investors in Maryland have access to a hard money loan that is specific to this need: the construction loan. With a construction loan, you can get started on a new project without a lot of time spent waiting.
What is a Construction Loan?
A construction loan in Maryland is perfect for new builds. This loan was created to help real estate investors who want to build new a commercial or residential property. It can be approved in a matter of minutes, and a reputable private lender can close it in a few days. A construction loan's length usually runs anywhere from between six months and two years, and the interest-only payments are often be bundled directly into the loan.
What's more, a construction loan requires very little upfront capital, if it requires any at all. Private lenders like Walnut Street Finance even have the ability to finance the full total of your points and closing costs. Plus, they can set you up with an interest reserve - this means you won't have to make any payments for the first six months.
How Do I Qualify for a Construction Loan in Maryland?
Traditional lenders (i.e. banks and financial institutions)can offer construction loans as well, but with a catch: you'll need to provide them with a lot of information, such as a blue book (a highly detailed description of your building plans), a down payment of at least 20 percent, a well-knownbuilder with a good reputation, proof of good credit, and you'lleven have to have the property's value appraised. And even if you do all of this and it looks good, your application may still be denied.
The process for obtaining a hard money construction loan is much simpler. Your private lender will just want to look into your ability to repay the loan, and they'll look into the amount of equity you've invested in the property already. This is why a private lender can fund construction projects that a traditional lender would reject.
Is There any Risk with Construction Loans?
If you've done your homework properly, the risk is low. That said,a hard money construction loan in Maryland will come with a higher interest rate, because private lenders take on greater risk. But as long as you're doing things the right way and keeping your project on track, this shouldn't be a concern.
Get Building with a Hard Money Construction Loan
Whatever the reason, be it a desire to build a luxurious townhouse in North Bethesda or a brand new commercial space in South Kensington, a hard money construction loan is a quick, effective way to get your project rolling. Be sure you find the right private lender to work with, and you'll be breaking ground soon.