All You Need to Know about Hard Money Lending

Hard money lending is a type of short-term mortgage loan that is especially popular among real estate investors. This is a flexible and quick way to finance large investments. Understanding what hard money lending is is essential if you want to invest like a pro. Read on to find out more about hard money lending.

What Is Hard Money Lending?

In layman’s terms, hard money lending is a type of loan borrowed at high-interest rates to finance short-term assets. This is the financial resource that investors turn to when they need quick and large sums of money borrowed on less stringent terms than a traditional loan. However, that is only part of the picture when it comes to a hard money loan.

Who Provides Hard Money Loans?

Hard money is generally lent by private organizations or individual investors against collateral. The hard money lender can be an individual investor or someone from the borrower’s network too.

Who Is Eligible for a Hard Money Loan?

Anyone can take a hard money loan. Yes, you do not need to consider your credit score when applying for a hard money loan. The lender lends money based on the property’s value rather than the investors’ financial credibility. Investors may find it easy to get funds for unoccupied properties, but with occupied properties, there are many rules and regulations.

What Is the Purpose of a Hard Money Loan?

Real estate investors obtain hard money loans to invest in undervalued property. They renovate or refurbish the property to generate significantly higher profits. This is known as “property flipping,” which entails purchasing a short-term property with the expectation of selling it for a higher profit later.

Pros and Cons of Hard Money Lending?


  • Large and quick cash source. You can get a loan easily in just days. The sum of the loan is much higher than a traditional loan, meaning you can take advantage of the market and invest in a high-value property as you see fit without debilitating borrowing restrictions.
  • Flexible loan borrowing conditions. Your loan will be approved without submitting a truckload of financial credibility documents. You can negotiate a flexible loan repayment schedule too.
  • It’s very convenient because you can keep the property you are borrowing as collateral. That does not mean other options for collateral are not available. You can mortgage other real estate property or investments too.
  • Fewer restrictions too. You don’t need to consider credit scores, LTV ratio, or other market indicators. Borrowers with poor credit scores can take advantage of this financial alternative.


  • Much higher interest rates. The interest rate for a hard money loan can be several times higher than a traditional loan.
  • The borrower has to repay the loan within the shortest period of time, like 6-18 months. You do not get to take your time and repay the loan like in a traditional loan. However, you can negotiate repayment terms or amounts with your lender.


Hard money loans are a popular financing option for real estate flippers because they provide higher profits in a shorter period of time following the initial investment. This type of private lending is an excellent option for obtaining large sums of money quickly, but it is unsuitable for other industries due to its higher interest rates and lower loan-to-value (LTV) ratios.



Want to know more about hard money loans to get started on your first investment? Contact us, and our Los Angeles private mortgage lending experts will reach out to you with answers to your questions.

As a Los Angeles hard money lender, we arrange loans for residential, commercial, mixed-use, multifamily, land, and unique properties. We offer flexible financing for a purchase, refinance, fix and flip, business purposes, foreclosure bail-out, and much more. Finance your investment with us.

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