What is Hard Money?

Great question.  Hard money is a commercial loan used to purchase real estate for investment purposes.  The lenders are private individuals or private institutions, so they are more flexible and can move more quickly than traditional lenders, but they also expect a greater return on their investment.


What kind of return?

Typically 5-8 points on the purchase price, and 13-18% interest.


That's expensive!

Yes, but there are definite advantages to using hard money.


Such as?

First of all, rather than lending on the purchase price of the property as banks do, hard money lenders will lend based on the value of the property once work has been completed. 

For example, if the home will be worth $100,000 when you finish your rehab, hard money lenders will typically lend 65% of the ARV (After Rehab Value) of the property.  If you buy the property for $40,000 and it needs $20,000 worth of work, you can buy the property with little to no money down - and the lender will lend you the $40K to buy it and the $20K to rehab it.  With traditional banks, you would need to put down at least 20% of the purchase price and come up with your own money to do the rehab.


What about closing costs?

We deal with that on a case-by-case basis.  If your LTV (Loan To Value, which includes rehab costs) is below the lender's limit - again, typically 65% - you can sometimes roll closing costs into the loan, lessening your out-of-pocket expenses.


But my credit's not so good...

Then you're in luck.  While most hard money lenders may take a look at your credit, it's often to determine terms of the loan.  The most important thing to hard money lenders is the value of the property, and the LTV.


Where do you work?

Our best Hard Money is in Maryland, Pennsylvania, New Jersey, DC, Virginia, North Carolina, Georgia, Alabama, Texas, Missouri, Kansas, and Minnesota, but we can help you pretty much anywhere, with a few exceptions.


So what now?

Find your deal and shoot us an email Info@TheHardMoneyHouse.com.  We'll take a look at it, let you know if we think we can get it financed for you, and we'll take it from there.