What’s D difference between a private lender & hard money lender?

[Guifre Mora]

Nothing, in my opinion. They are largely the same, equally give short-term loans to real estate investors at higher interest rates than banks and other institutional lenders.

There are several opinions concerning the difference between a “private lender” and a “hard money lender”. In my opinion, they are the same – a non-institutional money lender offering short-term mortgage loans to real estate investors. My take on this comes from the point of view of a lender in the private lending industry. Most individuals who would disagree with my opinion are real estate investors (borrowers). This is what I hear from many real estate investors:

“A private lender is an individual investor who lends his/her own money and does not charge any points/origination fees. A hard money lender is a private lending company that charges points and may get their funds from investors.”

Nevertheless, the lending companies which many real estate investors refer to as “hard money lenders” will frequently refer to themselves as a “private lender” or a “private money lender.”

Several private lending companies I deal with do not like to be associated with the term “hard money” because they feel it has a bad connotation and makes them seem unethical or having extremely high pricing.

But here are some of the benefits of doing business with a private lending company instead of an individual: More Qualified, More Consistent, never runs out of money, Reputation, Legal Compliance, Easy to Find, Better Pricing.

There are some benefits to borrowing from an individual investor: May offer higher leverage, may consider a joint venture or equity position, several don’t charge points (origination fees).