Hard money lending is an industry that often gets overlooked. Because it is out of the spotlight, many people have no idea how the process of hard money lending works. In order to fully understand how hard money lending works, you need to understand who hard money lenders are. In some cases, they may be a group of investors that have pooled their money together to create a hard money lending business.
Before seeking the assistance of hard money lenders, you have to know the basics of hard money lending to ensure a smoother negotiation with these financiers. Often times people have a difficult time finding a good hard money lending source. Another key advantage to hard money lending is that loans are available to people who may have less than perfect credit or have financial problems. Hard money lending is helping the economy for real estate investors access to conventional funding through banks for real estate projects has become difficult to obtain. Aside from this particular advantage of hard money lending, this type of non-traditional financing can bring more benefits to real estate investors. Another benefit of hard money lending is that instead of lending based on your creditworthiness or character, money lenders will lend based on the security of the loan. Though few people truly understand the hard money lending business from either a lender or a borrower’s perspective, the market represents an important opportunity for investors and borrowers alike. Regulation of the hard money lending business varies slightly from state to state, but laws are generally non-specific and fairly loose, with a few notable exceptions, where limits on interest rates are set low enough to discourage most hard money lenders from doing business. Private money investing is the reverse side of hard money lending, a type of financing in which a borrower receives funds based on the value of real estate owned by the borrower.