What is the Difference Between Private Money and Hard Money?

Glückliche Wiesn!

That’s right, Happy Oktoberfest to everyone! Here at Walnut Street Finance, we apprently speak not only real estate financing but also German.

While the masses flock to the local biergarten, and the smell of wiener schnitzel and sauerkraut permeates through the air, our team at Walnut Street Finance is busy servicing the Washington metropolitan area with the most efficient and professional hard money financing possible. As you chow down on your bratwurst, you may be wondering:

What is the difference between private money and hard money?

We hear those phrases used in our industry, but what do they really mean?

“Private money” generally refers to funding provided by a family member, friend, business partner, or other acquaintance. In short, a private money loan comes from a source that isn’t typically in the business of providing loans. Given the relationship between the lender and the borrower, a private money loan may mean more flexible terms and a lower interest rate than an equivalent hard money loan. For the average real estate borrower, private money loans are in limited supply and may be difficult to find.

Meanwhile, “hard money” – whose name refers to the “hard” assets underlying the loan, such as real real estate – generally refers to funding provided by non-institutional lending companies with, usually, set and defined lending criteria. “Hard money” lenders are in the business of lending money and in far greater supply for the typical real estate borrower.

If you are in the business of buying and renovating properties, both types of loans should be in your pool of resources. Knowing what is the difference between private money and hard money will create and enhance opportunities in the marketplace.

At Walnut Street Finance, we strive to be the best of both worlds: an established hard money lender with the flexibility and feel of a private money lender. That’s why we also use privatelending.com. Click on the link and see for yourself!

Contact us for more information on the right loan for your project and how Walnut Street Finance can help get it off the ground.