Hard Money Lending

[Samantha Chacon-Johnson]

Hello all, 

I am wanting to learning more about hard money lending. What is hard money lending? How does it work? Instead of a bank/mortage loan, are you taking a loan from an individual with capital? 

Has anyone go this route instead of traditional loans to purchase a property? What was the advantages? What were the disadvantages? 

Samantha 

[Chris Seveney]

Hard money loan is from an investor that typically does not require any personal documentation or very little. You pay through the nose in interest rate and points. If you are a borrower with cash and good credit, you do not need a hard money loan, and you can get what is called a Residential Transition Loan, which is a twelve-month loan for a fix and flip project. That rates, depending on experience, can be anywhere between 9 and 11%. Typically, a hard money loan is 11 to 15%.