It is not often that borrowers enjoy using a hard money lender to finance their projects. However situations do arise that demand the services of a commercial hard money lender. Let me illustrate this point with a story.

A few nights ago, one of the sinks in our house was plugged. Because I am a frugal person ("Cheap Smack" is the technical term) I decided to fix the problem myself. I called a relative to borrow their plumber's snake and clean out the plugged drain. Two hours later, I had unstopped the drain and had a functioning sink. However, had the sink been plugged at 7:30am as I was running out the door to work, I would not have hesitated to call the local plumber to come fix the problem. 

The timing of the problem made a world of difference in the price I was willing to pay for the service of a plumber. When I had time to work on the clogged drain, the price of a plumber was not worth it. If I had not had time to repair the drain, a plumber is cheaper than the damage that might be caused if the clog was left in place.

The same is true in commercial real estate lending. If the borrower has a loan scenario that will be approved by a bank or another institutional lender, the bank or institutional lender will likely offer a better rate and fee structure than what a hard money lender can offer. However, when the borrower is short on time, price becomes less of an issue and completing the transaction is more valuable than losing the deal.

If a client is going to lose their deposit money because another lender backed out, the cost of hard money may be cheap. The deal of a lifetime may net your borrower millions, if they can close in 15 days. Closing a 1031 exchange on time can save some clients millions of dollars in taxes. What if financing doesn't come through as planned? Is the price of hard money worth it then?

As real estate professionals we are paid for the expertise we have acquired. Knowing who to call and when can earn you respect and referrals from your clients. We can all use a more of those, can't we?