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How Do Private Mortgage (Hard Money) Lenders Differ?

You may think that all private mortgage (hard money) lenders are the same, but they as similar as comparing one restaurant to another.  

There are two primary factors that make private mortgage lenders different from one another.  The first difference is the types of loans they arrange and the second is whether they are a direct lender or a mortgage broker.  Some private lenders only lend on residential properties, where some lend on all types of properties, including apartments, office buildings, land, mixed-use, and other property types.  

The secondary reasons that differentiate private mortgage lenders are their funding and capital capabilities.   Are they a direct lender or a mortgage broker?   It is important to know where the actual funds are coming from and can the lender or broker fulfill their loan commitment and actually fund the loan.     Some private mortgage lenders have their own funds and or may manage a mortgage pool.  Other private lenders may only be brokers, which is not always bad, and will need to locate the lending source outside their office and internal capital resources.   

GW Private Capital arranges every loan with its own capital or with the funds from friends, family, and small boutique mortgage funds.

Another way in which private mortgage lenders are different is the minimum loan amounts they arrange.  Most private mortgage lenders have a minimum loan size, this may be $100,000 or it may be $250,000, this is set by each individual lender.   Every private mortgage lender usually has a maximum loan that they will arrange, $500,000 or $10,000,000.  Each lender will establish their own maximum limits.  

GW Private Capital, Inc. arranges loans as small as $30,000.  

Private mortgage lenders also differ in the lien position that they arrange.  Some only arrange 1st position mortgages, where some may arrange both 1st and 2nd mortgages.  

GW Private Capital Inc. arranges 1st and 2nd mortgages and in rare instances will also arrange 3rd position loans.

Not all private mortgage lenders arrange loans in all 50 US States, most lend only in one state or just a few.  Furthermore, many private lenders only lend in regions within a particular state. Some lenders may be licensed to lend in the entire State of California but may only lend in the Southern or Northern areas within the state.  Most private mortgage lenders will also only lend in certain counties and cities that they are comfortable lending within.  The majority of private lenders will only lend in major cities with higher populations and may stay out of areas that are in outlier areas, or rural communities.

Private mortgage lenders also differ based on the types of loans they arrange, consumer versus non-consumer loans.    Most private mortgage lenders will only arrange loans where the funds are for business or investment purposes.  Also, most private mortgage lenders will not lend on properties that are owner-occupied or where the purpose of the funds are being used for a consumer purpose.  A consumer purpose is where the funds will be used for their personal use, such as to buy a home to be their primary dwelling.  A consumer purpose could also be paying a credit card, paying an automobile loan, paying a student loan or to paying for a wedding.   

The reason that most private mortgage lenders do not arrange consumer purpose loans is because of the legal compliance requirements for arranging consumer loans is much more stringent and tightly regulated than for arranging non-consumer purpose loans.  All private mortgage lenders who wish to arrange consumer purpose loans are required to have additional licenses and comply with all state and federal lending laws and guidelines.     Most private lenders do not want to have to meet these requirements and subject themselves to the possibility of being penalized for violating these laws.  

After the recent mortgage and real estate market crash of 2009, all states and federal agencies created new and strict lending laws that were designed to protect consumers.  With the passing of these laws, they restricted the supply of private mortgages.  The regulations and laws that private mortgage lenders must now comply with are arduous and difficult.  Most private mortgage lenders have decided to not lend on owner-occupied properties and do not arrange consumer loans.  Most will only arrange loans for rentals and non-owner occupied and commercial properties.    

GW Private Capital, Inc does arrange consumer purpose loans, however, on a case-by-case basis.  We will arrange loans on owner-occupied properties where the purpose of the loan proceeds will be used for business, investment or a non-consumer purpose.  

Most private mortgage lenders will arrange purchase loans and refinances.  What makes each private mortgage lender different is their own unique lending guidelines and requirements.  Some private lenders may require a minimum borrower credit score and some may not care if a borrower has poor credit.  One private mortgage lender may be an expert at arranging loans for fix and flip investments, and will only require a small down payment from the buyer, investor.  Understanding these important differences is what make each private mortgage lender unique and different from the next.  

To learn more about Private Hard Money Loans, please contact Jay Green at
(714) 747-1912 or email him at

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With over 25 years of private mortgage “Hard Money” loan origination experience, I believe I am well qualified to answer this question. The terms Private Money and Hard Money are synonymous and there is no difference between the two. The term Private Money has become more widely used over the last 20 years. I think private lenders and industry professionals were trying to create a new term that sounded friendlier and less threatening to borrowers than “Hard Money”. Call these loans what you wish, Private Money Mortgages, Hard Money Loans or Private Hard Money Loans, they mean the same thing.

Private Money Loans Are Mortgages Funded With Private Investor Capital

The term Hard Money has been terms used for many decades and originated in the 1950’s. Private “Hard Money” Loans are mortgages that are funded by private individuals investors. Private Money Loans are mortgages that are based primarily on the asset or property and not on the borrower’s credit. Hard Money Loans have higher interest rates and the loan origination fees than traditional mortgages. Traditional mortgage lenders look at the property and the borrower.

Why Do Borrowers Borrower Hard Money Loans?

Borrowers chose private money loans over traditional mortgages for several reasons. Sometimes a borrower cannot qualify for a traditional mortgage because of his credit or he may not be able to show sufficient income, such as showing a large enough adjusted gross income on her tax returns. Time is also a big factor in deciding between a private money and a bank loan. Private lenders can fund and close loans in days, where traditional lenders take weeks. The condition of the property is also another factor why private money is the only financing option. Fix and Flip properties “fixers” typically do not meet the standards of traditional lenders.

Where Does One Find A Private Money Lender?

If you are a borrower who is looking for a private hard money lender, you can use the internet a do a Google search for Private Hard Money Lenders. I would include the county or geographic are that you where your property is located to find the best private lender for your unique needs.

I have been arranging private hard money loans for over 25 years and my company GW Private Capital, Inc, located in Whittier, California can assist you with most private money loan products. Contact us at (562) 789-1000.

To learn more about Private Hard Money Loans, please contact Jay Green at
(714) 747-1912 or email him

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One of the questions that people often ask me is how does one find a good property in Southern California to “flip”? There are actually about 60 specific ways to locate a property that can be purchased, rehabbed (repaired) and resold for a profit – “flipped”.

As a full-time investor “flipper” I have flipped hundreds of homes and over the last 8 years nearly 100 properties. The primary way that I find my “flip” properties, and what I recommend to new or seasoned real estate investors, is to network with as many local Southern California Realtors as possible.

Network With As Many Local Realtors As Possible!

Don’t just meet one or 10 Realtors, but I mean meet and have hundreds of Realtors help you find the perfect deal! That sounds difficult, but it is not. There are thousands of licensed practicing Realtors in Southern California who interact and talk with thousands of homeowners each day about buying and selling real estate. Realtors are your property finders and if you treat them with respect and impress upon that you are worth working with, they will bring you deals.

Why Would A Realtor Help You Find a Good Deal?

Realtors want to work with buyers and sellers and they also want and should be working with a few experienced investors “cash buyers”. You want to be one of the investors that they keep in the front of their mind when a good deal comes their way. If you present yourself like a pro and eventually become a pro, they will call you when that good deal comes their way.

How Do You Present Yourself Like a Professional Investor!

You have to start somewhere. Every investor started as a “newbie” and that’s okay! The way you present yourself like a seasoned real estate investor is to become confident and knowledgable about as much as you can about “flipping” properties. To be more specific, be ready to purchase a home when a deal is presented to you by one of your Realtors. Have your proof of funds (POF), your buying entity, a corporation or an LLC, and know where to find your lending sources, such as a reliable private hard money lender, before you look at any property or make an offer. Also, find your contractors and handymen and go and look at some of jobs and inspect their work.

What Types Of Properties Should I Be Expecting From My Realtors?

What you should be looking for are “off-market” deals. What this means are properties that are not listed on the (mls) multiple listing service. In this market, the competition is so fierce that deals that are on the mls are not going to be good deals and are not deals that you should waste your time pursuing or inspecting. MLS deals are being watched and hunted by the masses and thousands of investors. People will over pay for these properties and they will pay the prices that I won’t pay and you shouldn’t either! You want Realtors to call you when they have a property that has not hit the market and has not been shopped around. You want to become the special investor who one of your Realtors call to come look at the deal before anyone else. If you follow my advice in upcoming articles, you can learn how to become a professional real estate investor!

To learn more about how to locate
Southern California “flip” properties, contact
Jay Green at
(714) 747-1912 or email him