Private Money Landing vs. Hard Money Landing – Which is Good for Real Estate Loan

Private Money Landing vs. Hard Money Landing – Which is Good for Real Estate Loan Like many people, do you think private and hard money loans are the same? Why wouldn’t you feel so? Asset-based loans are standard in both hard money and private money lending. Although they have some similarities, you will get loans from non-traditional lending sources, but they still have significant differences.

It’s difficult to tell the difference between hard money and private money. Yet, many investors believe they are the same. So what are the differences & which one is suitable for your property deal or renovation projects?

Private Money Lender A private person or organization lends private money. Anyone with extra cash or an invested interest in your real estate investment could be brought in as a private money lender. What should be the lending term & how much good interest does the personal money lender charge? The lending terms in private money lending vary from lender to lender. It depends on what kind of lender they are. When selecting whether or not to lend to a person or corporation, private lenders can apply whatever criteria they like. They are not typically large businesses with standardized lending criteria, but rather individual investors lending personal capital to make a return on their money.

What is the interest rate charged by the private money lender? Well, that relies entirely on the type of lender they are.

Personal private money loans are incredibly flexible. However, it could put the borrower in a sticky situation. Apart from that, private money lending is not regulated as hard money loans, and it’s not regulated at all in some cases. Therefore, if you go down this route, make sure you research the private lenders, their rates, and their experience in the lending industry. Be an experimental investor, do some research and make a strategy before selecting a private money lender.

Hard Money lenders A hard money loan is obtained by using the ‘hard assets’. It is one of the most frequently used terms in the real estate business. Professional hard money lenders utilize the property as collateral and determine the loan amount. A hard money loan can be the way to go if you don’t want to put down a substantial quantity of money upfront to buy real estate.

Experienced investors understand the advantages of using a hard money lender in Los Angeles to supplement their private money sources.

So, what is the benefit of going with a hard money lender? Firstly, they’re semi-institutional & more organized than true private money lenders. Top-line hard money lenders in Los Angeles are licensed to lend to the borrowers that need hard money to finance a real estate project. They’re better experienced in fix and flip-style or asset-based investments than your average private money lender. Hard money lenders usually have fewer lending criteria. However, they are very much strict about the time of the loan, interest rates, and return time points. Hard money lenders in Los Angeles have more hoops to overcome the features of private lenders. Therefore, it could be a safe option for a first-time investor. It could be why savvy investors continue to go with professional hard money lenders in Los Angeles.

Conclusion While many legitimate hard money lenders offer asset-based loans, working with one who is going to take the time to learn about what you require, what your situation is and put together a loan to meet your needs is important. Make sure you take the time to look into the reputation of the hard money lender in Los Angeles.