A hard money lender is a private investor or company that provides asset-based loans secured by real estate. Unlike banks, hard money lenders focus primarily on property value rather than borrower creditworthiness, allowing for faster approvals and funding.
🔹 Speed – Hard money loans can close in days, not months.
🔹 Less Red Tape – Minimal documentation compared to banks.
🔹 Asset-Based Lending – Approval is based on the property’s value, not credit scores or income.
🔹 Flexible Terms – Custom loan structures to fit investment needs.
While banks prioritize the borrower’s ability to repay through income and credit history, hard money lenders focus on the exit strategy, such as selling or refinancing the property.
Even experienced investors with strong financials prefer hard money loans in situations where they:
✔️Need to close quickly and banks can’t meet the deadline.
✔️Have multiple investment opportunities but lack immediate capital.
✔️Don’t want to waste time dealing with bank bureaucracy.
✔️Require a loan larger than their bank line of credit allows.
The higher cost of a hard money loan is often outweighed by the profit potential of a great investment opportunity.
Advantages of Hard Money Loans
✅ Fast Approvals & Funding – Close in days, not months.
✅ Flexible Credit Requirements – Focus is on the property, not credit scores.
✅ Self-Employment Friendly – No income verification required.
✅ Simple & Streamlined Process – Less paperwork than traditional loans.
✅ Multiple Property Types – Lenders finance commercial, residential, and mixed-use properties.
Disadvantages of Hard Money Loans
❌ Higher Costs – Interest rates are higher than traditional bank loans.
❌ Varied Lender Quality – Some lenders may engage in predatory practices.
❌ Non-Refundable Fees – Some lenders charge deposits before securing funds.
To avoid bad actors, always work with a reputable, experienced lender like Attler Capital Group, Inc.
What Types of Properties Do Hard Money Lenders Finance?
Hard money lenders provide financing for:
🏢 Commercial Properties – Shopping centers, office buildings, industrial spaces.
🏡 Residential Investment Properties – Non-owner-occupied single-family homes, multi-units.
🌍 Land Development – Raw land for new construction.
🏨 Specialty Properties – Hotels, vacation rentals (varies by lender).
Note: Most hard money lenders do not finance owner-occupied primary residences due to regulatory restrictions.
Loan Documentation & Terms
What Documents Are Required?
While requirements vary, typical documentation includes:
📜 Promissory Note & Deed of Trust – Legal agreements securing the loan.
📊 Financial Statements – Limited documentation (bank statements, tax returns if required).
🏠 Property Valuation – Market analysis, inspection, or appraisal.
How Much Do Hard Money Loans Cost?
💰 Interest Rates: 9.5% – 12% (varies by loan type and risk).
💰 Origination Fees:1-3 points (1% – 3% of loan amount).
💰 Prepayment Penalties: Some loans have minimum interest requirements.
What Are Typical Loan Terms?
📆 Loan Duration:6 months to 3 years
💳 Payment Structure: Interest-only payments with balloon payment at maturity.
🔑 Loan-to-Value (LTV): Up to 65% of the property’s market value.
💼 Collateral Requirements: Typically first lien position, though some lenders offer second liens.
What Happens If a Borrower Defaults?
If a borrower is unable to repay, the lender may:
1️⃣ Attempt to negotiate alternative solutions (extensions, modifications).
2️⃣ File a Notice of Default (NOD) to begin the foreclosure process.
3️⃣ Foreclose on the property and recover funds through resale.
Hard money loans are secured by real estate, meaning the property serves as the primary repayment method.
What is Trust Deed Investing?
Trust deed investing involves funding loans secured by real estate. Investors earn passive income through interest payments while holding a lien on the property as collateral.
At Attler Capital Group, Inc., we offer high-yield trust deed investment opportunities with conservative underwriting and strong risk controls to protect investor capital.
Still Have Questions?
📞 Call/Text: 818-570-2040
📧 Email: info@attlercap.com
💬 Let’s Get Your Deal Funded Today!
