Hard money is a general term that relates to financing done through non-institutional means. Hard money lenders typically come in two sorts, private individuals and pools.

These days, pools of funds are less common than private investors. Most hard money loans that we deal with are placed with individual investors, or fractionalized. A fractionalized loan is one which has many private investors each taking a portion of the full loan.

With the recent credit crunch, the financial markets are still reeling from the turmoil. Banks and institutions have tightened up their lending standards to the point where even well qualified individuals may have difficulty obtaining a loan.

This is where hard money lenders step in. By using hard money, you are paying higher interest and more points, but it is this higher interest and points that makes the money available. When dealing with private investors, they are concerned about two things, their rate of return and the security of their investment.

By offering a double digit rate of return (typically 10-14%), the hard money lenders are realizing a much greater return than if they simply put their funds in a CD or other low interest bearing account. By dealing with a private individual, you also have the ability to tell your story. By becoming familiar with the transaction, and getting first hand information that many banks or institutions are not able to obtain simply due to the structure or size of the company, private investors are able to look at the entire picture to find their security.

Finding a hard money specialist is of paramount importance if you are in the market for a hard money loan. Not only is it important to have someone working on your behalf with the resources to find the money you need, but it is also important to have a specialist who can properly package and present your deal in a manner that shows the security of the investment.

Feel free to visit us on the web at our hard money loans page.