New Construction Loan vs. HML, which to use?

[Jeremy Mims]

Let’s say that I am looking for a distressed property to rehab and rent out. What are the tradeoffs to using a new construction loan versus a hard money lender? Are there certain aspects of the property that would only qualify it for one versus the other?

From what I have researched, new construction loans have much lower interest rates (5-6% vs 12%+ for HML). So I am trying to figure out what would make hard money lenders more attractive in this case. Does the condition of the property determine which type of loan is available?