Hard money lender in Allentown, PA.

I am a hard money lender in Allentown, and the building that defines investing in this city is the brick rowhouse or twin: two or three stories, a narrow lot, a back alley, and a basement that holds the real story of the house. Allentown sits in the Lehigh Valley, and it trades on its own terms rather than as a smaller Philadelphia.

What sets it apart for an investor is paperwork the city requires at both ends of a deal. A house offered for sale has to go through a city presale inspection, and a unit offered for rent has to be registered, licensed and inspected. Neither is hard. Both belong in the schedule, and both change the budget if you ignore them.

I am a private money lender, so the person who reads your file is the person who signs the term sheet, and a no comes with the reason. This page walks through the neighborhoods investors focus on, the deals that trade in the city, the inspection regime, and how fix and flip loans in Allentown, DSCR loans in Allentown and new construction loans in Allentown work on real buildings.

The core trade is the brick rowhouse or twin that needs a full interior. These houses are usually solid on the outside and dated on the inside: an old boiler or a converted heating system, panel and wiring upgrades, plumbing that has been patched for decades, and a kitchen and bath from another era. The masonry, the roof and the basement walls decide whether a rehab is routine or expensive, so those are what I want the contractor to price first.

Rowhouses that were long ago split into two or three apartments are common too. Some of those are legal conversions and some are not, and the presale inspection report is often where that question gets answered in writing. A buyer who plans to keep the units needs to know the use is permitted before the price is set, because a deconversion back to a single house is a very different budget.

BRRRR is a natural fit for the city. The basis on an unrenovated rowhouse is low enough that a full rehab fits inside a small loan, and renters are a large share of the city's households. The plan is buy, renovate, license the unit, lease it, then refinance into a long-term hold, and every step of that has a city inspection somewhere in it.

Flips work best where renovated sales give room above the purchase and rehab, which tends to mean the West End and the better blocks of the East Side rather than the most affordable wards. Infill and small new construction come up on scattered lots and on parcels near the river, and those turn on zoning and the permit path more than on finishes.

The city runs a rental registration and licensing program. A residential rental unit needs an active annual license from the city, and the unit is inspected against the city's housing, zoning and property maintenance standards. If the inspector finds deficiencies, the owner gets a written list and a set window to correct them. Licenses renew every year, per unit.

On the purchase side, Allentown also requires a presale inspection whenever a property is offered for sale or changes hands, including wholesale deals, auctions, tax sales and sheriff sales. The seller orders it, and the report lists code, permit and zoning violations. The seller can fix them before closing, or the buyer can sign a notarized acceptance and take on the obligation to correct them by the city's re-inspection.

For a BRRRR or a DSCR hold, that means two inspections sit inside your timeline, and I underwrite both. The presale report tells me what the city already expects you to fix, which belongs in the rehab budget from day one. The rental license and inspection come after the work and before the tenant, which means the refinance waits on the city calendar as much as on the contractor.

A DSCR loan qualifies on rent, and a unit that cannot be legally rented yet has no rent to count. So I want the license and inspection built into the schedule, not treated as an errand after the lease is signed. Rules and procedures change, so confirm the current requirements for your specific property with the city's Bureau of Building Standards and Safety before you commit to a closing date.

Fix and flip loans in Allentown put the purchase and the rehab in one facility, with rehab funds released in draws as completed work is inspected. On a rowhouse that usually means the first draw pays for demolition, the mechanicals and any masonry or roof work, and the finish money comes later. If you signed an acceptance of presale violations, those items go at the front of the scope, because the city will be back to check them.

I set the after-repair value from renovated sales of the same house type on comparable blocks. A rowhouse in the Sixth Ward and a twin in the West End are different products with different buyers, and I would rather see two close comparables than a citywide median. The term sheet is written within 24 to 48 hours, the loan closes in 5 to 10 days subject to title, and pricing is set per deal and stated in the term sheet.

How fix and flip loans work

DSCR loans in Allentown qualify on the property's rent rather than your personal income, so there are no tax returns or W2s in the file. I need the lease, a rent figure that holds up against what similar units in the neighborhood actually rent for, and evidence that the unit is licensed as a rental with the city.

That last item is the Allentown specific. A building that has been renovated but not yet registered, inspected and licensed is not ready for a DSCR close, however good the lease looks. These loans close in 14 to 21 days once the file is complete, and they work for a stabilized rowhouse or twin bought as a rental and for the refinance at the end of a BRRRR. Pricing is set per deal and stated in the term sheet.

How DSCR loans work

New construction loans in Allentown fund the land and the vertical build in one facility, with loans in that program running from $150K to $1M+. The projects that make sense in the city are mostly infill: a new twin or a small multifamily building on a vacant or cleared lot, or a larger parcel in one of the areas where former industrial land is being redeveloped.

I review the contractor's bids before closing, and I want a line-item budget, a schedule that matches it, and a builder who has completed comparable work. Zoning approval and the permit path come first, because a lot that sits waiting on approvals is a carrying cost with nothing to show for it. Draws follow the budget as work is inspected, and these loans close in 10 to 14 days on a complete file.

How construction loans work

The bridge loan is the first half of an Allentown BRRRR. You buy the rowhouse or twin, fund the purchase and the rehab through me, finish the work, get the unit through the city's rental license and inspection, lease it, and then refinance into a DSCR loan. Both loans come from the same lender, so the refinance is underwritten by someone who already knows the building and the scope.

The schedule is where these deals go long. Between the presale violations you agreed to correct, the rehab itself, the rental inspection and the lease-up, the bridge has to cover more than construction time. I would rather size the term for the full sequence than have you refinance in a hurry. Pricing is set per deal and stated in the term sheet.

How the BRRRR bridge works

The presale report comes first. If the buyer accepts the listed violations rather than the seller curing them, those items join the rehab scope and the city will re-inspect them, so the budget above includes them rather than treating them as a surprise.

The refinance cannot start until the unit is registered, inspected and licensed as a rental. I would schedule that inspection as soon as the work is complete, before the lease is signed, because a failed item pushes the whole exit back.

A renovated rowhouse in this part of the city does not carry a large spread over cost, which is why this example is a hold rather than a flip. If the appraisal comes in under the illustration, the refinance proceeds shrink with it, and the deal should still work at the lower number.