Definition
Hard money lenders are private investors providing short-term, high-interest loans (8-15%+) based primarily on property value, not borrower creditworthiness. Perfect for fix-and-flip projects when conventional financing isn't available. Use as bridge financing, not long-term solutions.
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Hard money lenders are private investors or companies providing short-term real estate financing, usually 6-24 months, at interest rates typically 8-15% or higher. Hard money loans are based primarily on property value, not borrower creditworthiness, making them accessible to investors with credit challenges or non-traditional income. Hard money loans have high fees (points), short terms, and are typically used for investment properties or construction projects. Hard money is expensive but provides capital when other sources are unavailable.
Pro Tip
Hard money is expensive but fast; use it strategically for short-term projects, then refinance into conventional financing when possible.
Example
An investor needs $200,000 for a fix-and-flip project but can't qualify for conventional financing. A hard money lender provides $200,000 at 12% interest for 12 months.