LLC and Hard Money Loans

[Jacob Claxton]

QUESTION: I keep hearing about using hard money to help fund projects when you aren't able to get a conventional loan. Looking into it, I see most hard money lenders will only lend to LLC's or other corporations, and not to individuals. Is it possible to get a hard money loan as an individual? Would it be better to get private money, or is that the same thing? Would it be reasonable to start an LLC before making your first deal? Anyone with some knowledge in this area would be greatly appreciated!

[Matthew Crivelli]

Private money and hard money are two different things. For both, most of the time you need an entity, this is because in order to lend to an individual you have to have an NMLS #. There are some who can do it with out but an LLC will open the doors up to way more options. It only takes a week or two to get an entity set up. Hard money is more fit in a box - cash - credit - experience and you will find little difference between lenders because most hard money notes end up getting sold to hedge funds. The hedge funds will only buy the notes if the notes meet their guidelines! Private money will have less hard guidelines but will have higher interest rates and will in general be more expensive. Both options have pros and cons, I would call some lenders and get a feel for what the market has to offer!