Private vs hard money

6 Replies

What is the difference between private and hard money lending. Are there any private and hard money lenders in the Richmond area.

Private money is typically a wealthy individual offering to lend.  Hard money is typically a company.  There is not a very strong distinction.

technically, private money is any source of money that will not be guaranteed by a government financial institution.

This means that portfolio loans, hard money, self-directed IRA loans, PPMs, and mortgages from your favorite uncle are all different flavors of private money.

Hard money is usually a subset of private money that is distinguished by the short loan term(e.g. 6 months to a year), relatively high interest rate, and excessive (disclaimer: my opinion) origination fees.

Loan investments processed through a self-directed IRA and a self-directed solo 401k are commonly referred to as promissory note investments. The note payments flow back to the IRA and the solo 401k and the funds continue to grow tax deferred.

Having been in Hard Money for 27 years - there is no difference.  There are some who refer to Private Money as individuals lending vs. a company lending, or Private being shorter term than hard money or more points than the other, etc. but in fact they are synonyms. If you search for Private Money or Hard Money companies in your area, county or state you will find companies that do this type of lending.

Two hard money lenders in the Richmond area are @Tom Kern of Richmond Rehab Funding and Mary Krumbein of Richmond Mortgage. Both are active in the Richmond real estate meetup groups (REIA and RING in particular).

Thanks for the information.

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