Is a hard money loan a cash buy?

3 Replies

Hello everyone. Is a hard money loan considered a cash buy? I keep hearing a lot of mixed answers to this one and would like someone to set me straight on this once and for all

No.  But, it gets confused because the biggest benefit of hard money loans are the the speed at which they will fund and close.  So you can put in a cash offer and close on a shortened timeline.  At the end of the day, as long as you show up that the closing table on time, and the seller gets their money, they don't care where it comes from.

But to answer your question, a hard money LOAN is a loan, not cash.

@Evan Polaski is correct a Hard Money Loan is not cash. A lot of buyers will as stated make a cash offer to the seller with the intent of using hard money which can help in getting the deal due to the fact that the transaction can move quicker than a traditional conventional loan. The only thing you have to be careful with here is making a cash offer and having the seller or agent request proof of funds to ensure that you do indeed have the liquid cash available to mask said cash offer. 

I hope this helps. 

@Michael Glist , that is a great point.  It has been a while since I made a cash offer with intent of using hard money, but you are right.  If you are making a cash offer, you need someone to give you a "proof of funds" document with your offer.  The couple times I did this, I had a family member provide their brokerage account statement, even though that money was never available to me.