Hard Money is Expensive! Is it?

Question

Hard money is expensive on purpose — it buys speed, not a long-term hold.

A hard money loan is short-term financing from a private lender, secured by the property itself rather than your income or credit. Lenders care mostly about the deal's numbers, so they can close in days instead of weeks — which is why flippers and BRRRR investors use it to grab distressed properties a bank won't touch. The trade-off is a higher rate, points up front, and a short payoff window, usually measured in months.

Example: you borrow $150,000 to buy and rehab, pay a few points and interest for six months, then repay the whole balance once you sell or refinance into a permanent loan.

Takeaway: Only use hard money when you have a clear, fast exit — verify current terms and points with the lender before you commit.

Jonathan Lee · Answer

Hard money definitely has its place, especially when speed and flexibility matter. I work with a lot of investors who use hard money to acquire or rehab a property quickly, then refinance into a DSCR or other long-term loan once the property is stabilized.

The biggest thing is having the exit strategy figured out before going into the deal. If the numbers work and you already know what your refinance or sale looks like on the back end, hard money can be a great tool rather than just an expensive loan.