Personal Loan VS Hard Money Loan

[Dante Givens]

Hey BP!

I have a newbie question. Why do most people utilize hard money loans versus personal loans in real estate transactions. I have a great credit score and I receive multiple offers for personal loans which leads me to think I should use a personal loan vs hard money loan for my next flip (FYI I’ve never used either before)

So my question is do personal loans tend to loan less money than hard money lenders? For example most of my offer letters qualify me up to $35k, if I execute the loan will they really only give half of what they offered? Just curious why HMLs are always the first go to instead of personal loans? Is it that you can borrow more with hard money loans vs personal? I’m leaning more to personal loans because I keep receiving offers but seeing that I never used either I’m not sure which one I should use. Ultimately Id like to do a flip and need to borrow between 35-50k, I have a decent salary and great credit.

[Caleb Jordan]

For lower prices properties that is an option, in fact it will be hard to find hard money loans for less than 50k.

A big difference may be monthly payment. Hard money is usually interest only payments, a ppersonal loan will probably require you to start paying down principle right away

Secondly many hard money loans don't show up on your credit, if you are doing a lot of  properties or several at once that is an advantage.