How is Private Money Different from Hard Money?

 

What is the difference between private money lenders and hard money lenders? There is no difference, just a different choice of words to describe the same thing. Both of these terms describe non-bank lenders, or a non-bank source of financing. For many people, this is a good debate on definitions that can go back and forth with many points of view. But this definition debate is a waste of time. The reason is because any loan that is not made by a bank is considered a private money loan. It makes no difference whether the non-bank loan comes from an organized group of individuals who work under a formal business entity, or whether the non-bank loan comes from Grandpa Joe – It is still a non-bank loan.

 

Because non-bank loans are fairly unregulated, they are widely misunderstood.

Some will argue and say that a private money lender has lower interest rates than a hard money lender. Or that a private money lender is a family member or friend while a hard money lender is a private individual. These are just opinions and not based on facts or any real authority. At the end of the day, a private money lender and a hard money lender are just two different ways to describe a non-bank lender. Take it or leave it.

 

Curious about how you can use non-bank loans to finance your real estate this year? Read more about how other real estate investors are bypassing the bank and using real estate loans to accomplish their goals this year: