What is hard money? Thanks.

In Buying Property - Asked by ling C. - Dec 4, 2008
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Answer(s)

James B.
Broker/Agent
The Colony, TX

usually non refundable cash on a transaction

Dec 4, 2008
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Gretchen S.
Lender/Mortgage Broker
Seattle, WA

Hard money often refers to money borrowed from a non bank lender. Typically higher interest rates/fees and charged than would be at the bank.
Hard money lenders typically have shorter terms for their loans (30 days - 24 months) and are able to close faster than a bank. Borrowers often seek hard money lenders when they have been declined by banks or need the money for a very short period of time until their conventional bank financing comes through.

Dec 4, 2008
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Glen W.
Lender/Mortgage Broker
Atlanta, GA

Hard money is non-conventional real estate financing. It can be used in various situations (bridge loans, properties not operating to potential, borrowers need to close quickly, etc..). Fairview Lending is a direct hard money lender. Below is a list of resources on hard money. I would caution borrowers to beware since hard money lending is lightly regulated (if regulated as all). Feel free to contact Fairview at 404 634 1270 to discuss a particular situation

Dec 4, 2008
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Joe V.
Owner/Investor
Plymouth, MI

Hard money is just what it sounds like...hard money. It is usually very expensive and hard qualify for. Short term payback, high points and interst, low LTV. It can come from a traditional lender, they just don't refer to it as Hard Money. Usually comes from private source, but NOT ALL private moany is Hard. You can get private money today at better terms than a bank.

Dec 5, 2008
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MM L.
Developer
Diamond Bar, CA

Hard Money is a term usually applied to private financing at rates and terms substantially different from FNMA, FHLMC, FHA. Hard Money despite it's name implies, is quite easy and fast to get. However, the cost is usually higher than standard, portfolio, bank, or conventional financing. It can be used for purchase or refinance of various types of properties. The term (time you get to keep the money) of the loans are usually short term, i.e a few months to a couple of years. The documentation requirements are usually less stringent than standard home loans. Experienced real estate investors, builders and professionals are better suited for this type of financing. Homeowners must be very careful, and use only
in cases of extreme emergency or hardship, and then still be advised of all of the terms. For more questions, email michellelowe@michellelowe.com

Dec 8, 2008
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Jerry F.
Owner/Investor
Buckskin Joe, CO

Hard money is the answer itself. Plain hard cash, that comes with a price. Higher interest, points, business control and pressure. Hard money is often the first and last resort to those whom traditional financing is not an option. IE: Bad credit with no where to turn.
Loan to value is lower as well. Perhaps 50% of loan value. That means you want 500,000 you better have 1,000,000 to back it up, or what you want the money for is worth that and more. This does not mean, forcasted values. Also make sure you have a clean and clear exit plan. Now the blood factor. If something happens they want you to feel the same, and more, pain they feel.
Also control. You will give up a portion of your business to them. This can also mean they are given a seat on the board of directors. These are people who use their money to work for them. They want and get higher returns in shorter time frames than they would elsewhere. Kinda like a loan shark. Only the loan shark will not ask for balance, income and cash flow statements.
Hard money will not take raw land and build a business without other real property worth more than you build. That goes back to forcasted values. It is another way for people with money to find a great deal. Like the 8 million dollar house for 250,000 dollars. They can sell for 10 million. It takes money to make money and they have the money making the money.
I am not a lender a broker, just someone else looking to go into business with no money. I have learned what I have written about by looking deeply into obtaining hard money. They are simply asset based lenders. They may or may not check your credit. Full, limited or partial documenation. You may even have to wine and dine them. Pay for them to come to you to see the deal first hand. All kinds of what evers.
It is truly an option if you have lousy credit or a deal no bank will touch. I just have not figured out how to obtain one. Also they will not loan operating cash, although they say they will. That is unless what they loan is 20% of the entire value and they hold the keys to the house. I would like to borrow a 1/4 mil to buy an up and running business, franchise property and all. But I realize to me the hard money is how hard it will be for me to come up with. Do I own enough stuff to sell to raise the money? I do not know.

Dec 11, 2008
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Glen W.
Lender/Mortgage Broker
Atlanta, GA

Hard Money refers to a loan made on a piece of real estate (hard asset). Hard money lending is the wild west of lending so the buyer needs to beware when pursuing this type of transaction. There are definitely situations where hard money is beneficial to the borrower, but the borrower needs to fully understand the risks/rewards. Below is a link to a hard money lending guide (http://www.fairviewlending.com/hardmoneylenders.htm) that can answer allot of the questions on the topic. Fairview is a direct hard money lender and never takes upfront fees. The upfront fee is one of the biggest risks on getting a hard money loan. Good luck

Jan 21, 2011
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Alicia B.
Lender/Mortgage Broker
Pomona, CA

A hard money lender is an investor who makes loans secured by real estate, typically charging higher rates than banks but also making loans that banks would not make, funding more quickly than banks and/or requiring less documentation than banks.

May 12, 2013
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