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Hard money lenders are commercial real estate lending companies offering a specialized type of real-estate backed loan. Hard money lenders provide short-term loans (also called a bridge loan) that provide funding based on the value of real estate that has been collateralized for the loan. Hard money lenders typically have much higher interest rates than banks (between 11 and 16%) because they fund deals that do not conform to bank standards.
Market
Hard money lenders may serve a regional market, or may offer loans nationwide. Hard money lenders are often represented by brokers who may take a percentage of the loan (called points) in exchange for preparing and submitting the loan documentation (as well as finding a direct lender).
Several online directories offer links to multiple hard money lenders for brokers or borrowers seeking a lender.
Regulation
Several states' usury laws, including Tennessee and New Jersey prevent hard money lenders from operating with their usual practices.
Effectuation
Hard money lenders will offer a range of requirements on the loan-to-value percentage, type of real estate & minimum loan size for a hard money loan.
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