How Hard is Hard Money? Harder than Traditional?

Chatting up around the water cooler one might hear debates about hard money vs traditional lending. Both seasoned investors and rookies alike are immersed in this world of lending. One major difference is the “beast” of underwriting, but with the right tools it becomes a breeze to understand!

Within the “beast” of underwriting, the first major difference is how the funds issued are being leveraged. Hard money lenders give you more money because, unlike traditional lenders that focus on the entire asset i.e. the acquisition and the rehabilitation ,hard money lenders issue a large portion of both the cost to purchase and rehab the property. This allows you, the investor, to focus on what really matters in the world of business scaling quickly and effectively!

The second major difference is the focus on risk. A traditional lender focuses primarily on borrower credit worthiness, but a hard money lender is focused on the asset in question! Most active investors will advise you that keeping a top-notch credit score and a low debt to income are nearly impossible. Do not dismay though because a hard money lender sees the entire picture!

Hard money lenders may want to see a clean credit report with no bankruptcies or foreclosures, but the bread and butter is experience. Also, worth noting, you only need to have a 2-year seasoning on any bankruptcy or foreclosure with many hard money lenders. Experience shows that you know the name of the game and is something that is not always actively reflected by income or credit scores. Traditional lenders will seldomly give experience a second look when making their decisions.

Traditional lenders sometimes limit certain assets classes which might be the ones in which you build your empire and brand! Hard money lending has a wide variety of real estate investment transactions and aren’t interested in selling you a checking account, CD, or a credit card! This allows the lender to focus on the most important part of the equation, YOU! You will have all the support to grow, nurture, and develop your dream real estate projects to build your EMPIRE!

Are you newer to the industry? Do not despair as there are options for you too! If you are newer to the industry, our blog is a great spot for you to learn and catch up with your Flippin’ Friday counterparts!