Hard Money Lending is exactly what it sounds like; loans that are hard to do. Many borrower's needs fall out of the mainstream loan guidelines and they often need a "short-term" fix. Now I want to be clear, this is not an advertisement for my private-lending practice; it is meant to be educational so that Realtors know that there are other options out there and mortgage brokers might expand their horizons to fill up their pipeline.
A private loan is essentially someone with a lot of money lending to someone who needs it and can't get it from banks or mortgage companies. Most of my investors are older, retired, well-heeled, and smart. I have learned more about "true" underwriting in the past few years than I have in the nine years in the preceeding. Investors are sharp and know how to mitigate loss. They are also quirky and their quirks tend to match up with their life experiences.
Let me give you some examples where hard money loans are appropriate and the type of investors I match up with the loan: