Oftentimes, the terms hard money lender and direct private real estate lender get used interchangeably due to the similarities both possess. Both will lend based on the “hard asset” or the property/collateral itself, but private money lenders take into account additional factors beyond just the property such as the borrowers’ credit history, available cash, and income. Private money lenders are not banks but rather companies that loan investors the capital they need to finance their real estate investment deals.

 Private money loans are provided to investors for their non-owner occupied property investments such as a long-term buy or fix and flip and hold rental. For fix and flip properties, these loans are usually short-term, with the expectation to be paid off within one year. For rental properties, private real estate loans can include a 30-Year Fixed-Rate loan as well as Adjustable Rate Mortgages (ARM’s). These loans can be used to either purchase the property, refinance or get cash out of an existing one. 

Add an answer to this item. Depending on the private lender, they can loan on commercial or residential transactions. For the residential side of investing, private lenders can work with investors on either single-family properties or multi-family deals. Some specialize in fix and flip and rental properties, thereby providing their borrowers with up to 90% of the purchase and repair costs of the properties, in addition to experience and expertise that will help their borrowers further grow their businesses.