What is a "Hard Money Lender"?

H A R D      M O N E Y

A number of you may have heard this term but wonder just what it means.  "Hard money" lenders are individuals with their own private money that is available for other buyers/investors to borrow for investment opportunities.  Some of these lenders have limited resources while others may have very "deep pockets."  Generally they lend money to individuals and real estate investors on a short-term basis.  The purpose of the loan can be for a variety of reasons including purchasing a property or renovating a particular property.

It is not called "hard money" because it is difficult to obtain but rather because it most always has a definite repayment schedule that is not very flexible.  With private financing, the loan terms can be quite strict with very low loan to values (LTV's), upfront points and interest rates that are almost always higher than the general market.  Terms vary with some lenders only charging interest while others amortize their loans.  Most individual lenders are concerned primarily with the value of the property and place less emphasis on the investor's credit score.

It is a great source of money for many Buyers, so Realtors need to be familiar with this resource.