‹ Articles

Private Money vs. Hard Money – Real Estate Loans

Many people think that a private money loan and a hard money loan are the same. Though they have some similarities, they also have some major differences.

Private Money vs. Hard Money – this post will discuss.

You may think that a private money loan and a hard money loan are the same things, and why shouldn’t you?
Both hard money and private money loans are typically asset-based loans.
Personal credit in most cases, is not even involved from non-traditional lending sources.
So what are the differences?

Hard Money Loans vs. Private Money Loans

Hard money loans are typically easier to find. Some private money loans are more about a relationship with a friend or family member. In most cases, private money lenders are found via networking.

Private money lenders are not typically organized and are not usually licensed to loan money. On the other hand, hard money lenders have organized money lenders and are usually licensed to loan money.

Hard money lenders typically have lending criteria like the time of the loan, interest rates, and points.

You will find that private money loans will offer much more flexibility on all of the above.

Many hard money lenders will fund those loans from other private sources, so they must mark up the interest rates and points somewhat to make a profit. Working directly with a private money source, you most likely will cut out the middleman, which may offer slightly better terms.

The challenge here is if you need a loan based on real estate equity, private money lenders, for the most part, do not advertise. You have to learn how to find and attract private money.

A Commercial hard money lender, however, can be much easier to find.

Whether you are looking for a hard money loan or a private money source, DFW Hard Money lends money to real estate investors at competitive rates in the Dallas-Fort Worth metroplex for non-occupant loans.

Posted in: