How hard money loans work in Maryland.

If you're new to real estate investing, "hard money" can sound intimidating. It's simpler than it sounds: a hard money loan is a short-term loan secured by the property itself, used by investors to buy and renovate real estate quickly. Here's how it actually works.

What is a hard money loan?

A hard money loan is a short-term, asset-based loan from a private lender (like MD Private Lender) rather than a bank. Instead of focusing mainly on your credit score and income, a hard money lender looks first at the deal — the property's value, the equity, and your plan to repay. That's why investors use it: it's fast, flexible, and based on the opportunity in front of you.

These loans are used for business-purpose real estate — fix & flips, rentals, new construction, and small commercial — never owner-occupied homes.

How is it different from a bank loan?

• Speed: A hard money loan can close in days to a week or two. A conventional loan often takes 30–45 days.
• What matters: The deal comes first — property value, equity, and exit strategy — not just your credit and W-2 income.
• Flexibility: Private lenders can structure creative terms and fund renovation costs, which banks generally won't.
• Term: Hard money is short-term (often 12 months), designed to get you in, renovate, and out — by selling or refinancing.

What does it cost?

Hard money costs more than a bank loan because it's faster, funds rehab, and takes on more risk. Pricing is typically expressed as an interest rate plus "points" (an upfront fee, where one point equals 1% of the loan). In exchange, you get speed and leverage a bank can't offer. For an investor doing a fix & flip, that speed is often what makes the deal possible — and profitable.

Key terms to know

• ARV (After-Repair Value): what the property will be worth once renovations are complete.
• LTV (Loan-to-Value): the loan amount as a percentage of value. We typically lend up to 75% of the ARV.
• Draws: renovation funds released in stages as work is completed — we fund draws in 24–48 hours.
• Exit strategy: how you'll repay the loan — usually by selling (flip) or refinancing (rental).

A typical fix & flip, step by step

1. You find a property and submit the deal (address, purchase price, rehab budget, ARV).
2. We evaluate it with you and approve — often the same day.
3. We fund the purchase and hold the rehab budget, closing in as little as a week.
4. As you complete work, you request draws and we release funds in 24–48 hours.
5. You sell or refinance, and the loan is paid off. No prepayment penalty.

When should you use hard money?

Use it when speed and flexibility matter more than the lowest possible rate: competitive markets where you need to close fast, properties that need renovation a bank won't finance, or deals where you want to fund purchase and rehab together. If you're holding long-term, you'll often refinance out of the hard money loan into a conventional loan once the property is stabilized.