Role of Private Money Lender and Hard Money Loan In Creative Financing

[Daniel Kopp]

What role do private money lenders and hard money loans play in creative real estate financing, and how can investors effectively utilize them?

[Erik Estrada]

This is a very broad question but to give a general answer, the reason why they exist is to finance properties that won't fit the typical bank credit box. The goal is to get the property or borrower prepared for conventional financing. 

Good investors know how to play with fire. Private money is like fire. If you are over leveraged, aren't prepared/don't have a plan to get out, you will get burned easily. But if you have reserves, multiple exit strategies, and the ability to pencil out deals, you will be able to take advantage of these loans easily.