Merry Christmas eve to everyone!

Today, I want to quickly talk about….

Private Money vs. Hard Money

First of all, I hope you don’t confuse private money with hard money.  They are NOT the same!  Although hard money may come from a private individual just like private money,  there are significant differences. I’d like to go through them with you right now.

Here are the main differences:

• Hard money = points up front, high interest, low loan to value, draws for repairs (if any), selective on deals, mandatory refinancing or cash out, short term, contingencies
• Private money = lower interest rate, no points, no draws, longer term, more flexible, no contingencies, profit sharing

Real estate investors that use private money to power their way to profitable deals don’t have to give hard moneylenders the time of day. Who wants to pay 5 points and 15% interest? Plus fees and closing costs? Talk about ouch!

The biggest problem with hard money is lack of flexibility.  You are constrained by the lenders requirement.  How do I know this?  Because I make hard money loans.  Yes, I take private money from my investors and, when I have a few hundred grand in extra cash laying around in the bank, Read More→