What are Hard Money Lenders?????? - Posted by Walt-FL

Posted by Bill K. (AZ) on December 19, 1999 at 15:58:06:


Here’s some information that I found, not long ago, on hard money lenders. I don’t remember exactly where this came from, but the info is quite useful.

The term “hard money” actually derived itself from the idea that the project is hard to finance, not that the lenders are hard to work with. Hard money lenders loan money to qualified projects quicker than conventional lenders, at a higher rate and speedier time frame than conventional lenders, but the project must make financial sense. The most important factor to a hard money lender is risk of their investment. If the borrower has substantial cash investment in the project (usually 25-35%), then the loan will usually close if the borrower will present the lender with the following:

  1. Borrower must present to the lender a project description that is clear, concise, realistic, and honest.
  2. Project must be feasible, have no title or environmental risk, and have a realistic exit strategy. Project profitability must be significant enough to support current and/or back end costs of the loan based upon conservative operating assumptions.
  3. Borrower must be experienced, cooperative, creative, flexible and confident in their abilities and the feasibility of the project.
  4. Borrower must not be insistent on terms, and leaves the lender to their own good judgement to make the best possible offer relative to their risk in the project.
  5. Borrower must be able to comfortably and willingly pay the lenders actual due diligence cost and all closing expenses, includng necessary 3rd party reports.

LTV’s usually range form 50%-65%, but may be up to 80% for purchase or special circumstances. Interest rates generally range from 12% and higher, possibly with equity kickers. Points range from 3-10 points at lenders discretion. Closing costs are paid by the borrower. Due diligence and commitment fees may be 1/3% to 1/2% of the loan amount, and are paid by the borrower. Third-party reports, appraisals, environmentals, and so forth, are paid by the borrower.
Closing of qualified projects may take place in 5-10 days after all documentation is approved by the lender.

Much of this applies to commercial projects. Residential lenders may be less stringent in their requirements, but it gives you an idea of how it all works.

I hope this helps.

Bill K. (AZ)

What are Hard Money Lenders??? - Posted by Walt-FL

Posted by Walt-FL on December 19, 1999 at 15:14:23:

I keep hearing everybody talk about Hard Money Lenders. Who are they, what do they do, and where can you find them. Do they require A-1 credit or are they flexible with those who are less than perfect(way less). Any info in this area would be a great help. I’m going to my 1st REI club meeting the first of Jan and I am PUMPED. Thanks in advance.

Re: What are Hard Money Lenders??? - Posted by Rob FL

Posted by Rob FL on December 21, 1999 at 08:19:42:

When you attend the CFRI meeting in January, you should be quite enlightened. There are a ton of individuals/companies that give hard money loans at the meeting. Some require credit and income checks, some don’t. But there are plenty to pick from.

Walt-FL where in Fl RU @? - Posted by Walt_FL

Posted by Walt_FL on December 20, 1999 at 19:40:57:

Tampa Bay, Pinellas County here…


Re: What are Hard Money Lenders??? - Posted by Potash

Posted by Potash on December 19, 1999 at 19:48:11:

Walt the salt,

Those hard money dudes dont give no jive bout your sloven credit, your shameful payment history, your demonstrated inability to manage money. Longs you got the equity they be shelling you the lettuce. Before you smell the green expect to sign your Jimmy Johhson on a flotsam of paper. Their interest rates and fees will have a pernicious effect upon your cash flow situation. If you miss a payment youll feel like a Jackdaw in headwind. Miss two, and youll feel like a urinal on game day. Carpe Nostrum.

Also see Ed Waschman’s “How To” article. - Posted by Jim Kennedy - Houston, TX

Posted by Jim Kennedy - Houston, TX on December 19, 1999 at 19:15:52:


In addition to the information Bill K. provided, you might also want to go the ?How To? Articles at this website. Read ?A Glossary Of Common Terms Used In Loans And Lending? by Ed Wachsman. Go to:


Best of Success!!

Jim Kennedy,
Houston, TX