Financing 101- Hard Money Loans

A hard money loan, sometimes also known as a private loan, is one that is usually secured by a real estate asset, but not always. The Hard money loans are often used by people who need money very quickly for a turnaround transaction or a short period of time. The interest rates are much higher, and the payback time is much lower than normal loans. Bank loans can take months for approval, while hard money loans can be arranged in a couple days.

The main pro of the hard money loan for the lender is a very large or above average return on their money, and a short repayment time usually under 1 year.

The main con is the large risk of default and need to go to court to get your money returned or take a claim on the asset.