What exactly is “hard money”? It’s a real estate loan you get from a non-traditional lender, secured by the property and often not by you. Hard money interest rates range from 14% to 20%.
The lender also charges “points” (one point is one percent of the loan amount, usually financed into the deal), which can range from 1 to 10.
Why would someone use hard money? Because hard money lenders are primarily concerned about the property you’re buying, and not solely about you as a person. Typically, hard money lenders will loan you up to 65% of the after-repaired value of the property.
The benefit of using hard money instead of bank financing is that if you buy a property that is worth 65% or less of the after-repaired value of the property, you can get into the deal for little or no money down and get the funding to purchase and rehab your property. Hard money lenders are much easier to work with than banks.
James
