Private Lending vs Hard Money

[Donald Torrence]

Here is a problem that I am having with people who are saying they are private lenders. You will hear them say that it’s all hard money. They say this because of the interest rates. Little do these people who say they are private lenders know is there is a difference? You will see both are close to being the same but one is cheaper than the other. I have put together a list for you to know what the differences are between hard money and private lending. After looking at the list please tell me which lender you prefer to work with.

Now, will the real private lenders make yourself known so investors can reach out to you and not the people saying send some money and they will wire the funds into an account? All funds or fees should be at the closing table.

Private Lender                           Hard Money Lender

Look at your credit                                               Yes                                            Yes

Based on the property                                         Yes                                            Yes

Will loan 100% of purchase

and rehab                                                             Yes                                             No

Personal relationship                                           Yes                                             No

Interest rates from 6 to 8%                                 Yes                                             No

Loan terms from 6 to 12 mo.                               Yes                                            Yes

Flexible terms                                                       Yes                                            No

Will do joint venture deals                                   Yes                                             No

Can close fast                                                      Yes                                             Yes

Fees                                                                     May or May not                          Yes

Charge points                                                       No                                               Yes

REAL ESTATE INVESTORS YOU SHOULD ALWAYS BE LOOKING FOR FUNDING.

SHARE YOU THOUGHTS ON THIS MATTER.

[Ann Bellamy]

You are basing the post on the premise that your table is accurate, and it is not.  There is no official designation of what constitutes a hard money lender or a private lender.  And each lender determines their own criteria and terms, and way of doing business.  Obviously the table you created reflects your experience, but that's all it is, your experience.  

Many people who want the high returns of hard money but who want to sound less expensive or less scary use the term private lender to advertise themselves.  "Private lender" simply means non-institutional.  After that, it's a free-for-all of plain old marketing.