H RIVATE

Essentially hard money and private lending are one in the same and odds are, you have never heard of it, or how powerful it can be in your investment deals. We are often asked, “why don’t I just go to a bank and get a conventional loan for a flip? The answer is very simple, you can’t. Banks typically don’t lend on distressed property, regardless of the condition. Even if it was a perfectly clean property you grabbed at a foreclosure auction, they aren’t lending on it right away.

For sake of this quick lesson, we are going to refer to Hard Money as the institutions who lend capital for fix and flips and other alternative projects. Private Lending is essentially you are being that institution.

Hard Money works similar to a conventional loan, except you pay a higher rate and you are paying interest only on the loan. You identify the property, it goes through a typical appraisal process, it is funded through a closing attorney and so on. You make repairs and then you are able to draw on your loan for those repairs once you made them. Some people feel leveraging capital is expense, due to the higher than conventional loan interest rates. Look at it this way, if you had $100k to invest would you want to put it all in one property, or be able to leverage hard money and put into three $100k investments at the same time?