3 Mistakes to Avoid with Hard Money Loans in Pennsylvania

Pennsylvania real estate is ripe for flipping and building — but missteps in loan setup can drain your profits before you even start. Whether you’re investing in Philly, Allentown, or Pittsburgh, hard money is a powerful tool — if you use it wisely.

Let’s unpack three frequent mistakes that even seasoned investors make, and how to sidestep them.

Mistake 1 – Underestimating Rehab Costs

Why It Happens

• Inaccurate contractor quotes
• Skipping home inspection details
• Overconfidence in timelines

What It Costs You

• Incomplete draws
• Cash out-of-pocket
• Project delays & lender disputes

 Avoid this: Use a rehab calculator and define scope before funding — Fix & Flip Loan Estimator

Mistake 2 – Choosing the Wrong Loan Structure

Examples

• Taking an interest-only bridge loan for a rental project
• Not factoring prepayment penalties
• Using high points loans for long-term holds

Solution

• Use DSCR for stabilized rentals
• Hard money for flips with short rehab timeline
• 30-year investor loans for income properties

 Match loan to exit strategy — DSCR Loans in Pennsylvania

Mistake 3 – Ignoring Local Market Trends

Philly Example

• Zip 19125 may yield 15–20% ROI
• Zip 19140 struggles to appraise above $100K post-rehab

Impact

• ARV fails
• Funding gap
• Valuation shock during refinance

Use updated comp data — How to Calculate ARV in Philly 

Bonus Tips to Protect Your ROI

• Lock draw schedule up front
• Verify lender’s process for inspections
• Check appraisal waiver options
• Review loan docs for balloon clauses or rate resets