Hard Money

Hard money loans are secured primarily by the property value rather than the borrower's creditworthiness. They close fast (days to weeks vs. months for conventional), require less documentation, and carry higher costs: 10-14% interest, 2-3 origination points, and terms of 6-24 months. Hard money is a legitimate acquisition tool for deals without a motivated seller. However, in markets where seller financing is available - particularly with free-and-clear motivated sellers - seller financing at 5-7% with a 5-7 year balloon is almost always superior to 12% hard money. Use hard money when no other option exists; use seller financing when the seller is open to carrying.