A hard money loan is a short-term, real estate-backed loan provided by private lenders or lending companies. Instead of focusing on the borrower’s credit profile, the lender looks at the value of the property and the potential for profitability. These loans are designed to close quickly and often provide financing where traditional banks cannot or will not lend.

Hard money loans are commonly used for:

- Fix-and-flip projects

- Bridge financing

- New construction

- Land acquisition

- Rental property investment

- Cash-out refinances for investment properties

No. While flips are common, hard money loans are also used for construction, land, rentals, bridge financing, and more.

Hard money loans vary by lender, but most share common features:

- Loan-to-Value (LTV): Often up to 65–75% of the property’s value or ARV (after-repair value).

- Term Length: Generally 6–18 months, with extensions available in some cases.

- Interest-Only Payments: Borrowers typically make interest-only payments during the loan term, with the principal due at maturity.

- Points and Fees: Expect origination fees ranging from 1–4 points.

Because these loans are short-term, it’s important for borrowers to have a clear repayment plan. Common exit strategies include:

- Selling the property after improvements (fix-and-flip)

- Refinancing into a traditional long-term mortgage

- Refinancing into a rental property loan

- Paying off the loan with proceeds from another investment

Some lenders offer extensions, but it’s best to plan an exit strategy within the loan term.

Since hard money lenders prioritize the property over the borrower’s credit score, qualification requirements are typically more flexible than traditional lenders. Many borrowers who may not qualify for bank financing — due to credit issues, property condition, or time constraints — may still obtain a hard money loan if the deal is strong.

Lenders often look for:

- Property with sufficient value or potential value

- Clear exit strategy

- Reasonable down payment or equity contribution

- Experience with real estate investing (preferred, but not always required)

No. Hard money loans are primarily based on property value, not credit scores. However, lenders may still review credit history as part of risk assessment. Book a call with me to see if you qualify.

Some loans close in as little as 5–10 days, depending on property documentation and lender requirements.

Hard money benefits include:

- Speed to Close: Many hard money loans are approved and funded in as little as 5–10 days.

- Flexible Underwriting: Focus is on property value and potential, not just borrower credit history.

- Asset-Based Lending: Approval is based on collateral value, making funding accessible to more investors.

- Short-Term Solutions: Ideal for projects with quick turnaround times like flips or bridge scenarios.

- Competitive Advantage: Quick closings can help investors stand out to sellers.

Most commercial hard money loans offer 65-70% LTV based on current property value, or up to 70% of after-repair value for renovation projects. Exact ratios depend on property type, location, condition, and borrower experience.

YES, refinancing to permanent financing is the most common exit strategy. Once properties are stabilized, renovated, or income-producing, they typically qualify for conventional commercial loans at lower rates with longer terms.

Choose hard money when speed is critical, the property doesn't qualify for conventional financing due to condition or circumstances, you're competing against cash buyers, or when traditional lenders won't approve your specific situation. It's transitional financing for unique opportunities.

Choose conventional loans when you have strong financials, need amounts above SBA limits, want faster closing, or plan investment/speculative projects that don't qualify for SBA programs. If you can qualify for conventional terms, you often get better rates and more flexibility.