Execution path
Hard Money
Asset-based short-term lending designed for real estate investors. Expensive by conventional standards — but often the only tool that works for certain deals.
What It Is
Hard money is a short-term loan from a private lender or lending company — not a bank. The loan is primarily based on the value of the asset (the property), not your personal income or credit score. Decisions are made in days, not weeks. That speed and flexibility is why investors use it despite the higher cost.
Typical Terms
Interest rate
9–14% annually
Loan term
6–24 months
LTV (loan-to-value)
65–80% of ARV
Points (origination)
1–4 points upfront
Approval time
3–7 days
Repayment
Interest only + balloon at term end
What Lenders Look At
Hard money lenders care about the deal, not just you. Here's their primary checklist:
ARV (After Repair Value)
The most important number. Lenders lend against what the property will be worth, not what it is today.
Loan-to-ARV ratio
Most lenders won't exceed 70–75% of ARV. Lower = more favorable terms.
Exit strategy
Sale (flip) or refinance (BRRRR). Lenders want to know how they get paid back.
Your experience
First-time flippers often pay more or get less. Track record helps get better terms.
Property type and location
Single-family in good markets = easiest to lend on. Unusual properties or tough markets = harder.
When Hard Money Makes Sense
- —Fix & flip with clear sale exit
- —BRRRR where you plan to refi out
- —Distressed property not bankable conventionally
- —Need to close in days, not weeks
- —Property doesn't meet conventional standards yet
When It Doesn't Work
- —Long-term holds (rates make cash flow impossible)
- —When your exit is unclear
- —When the deal is too thin to absorb interest costs
- —When you need more time than the term allows
- —When you don't have a clear payoff plan
A Note on Cost
Hard money is expensive relative to conventional financing — but that's not the right comparison. The right comparison is: what does the deal cost with hard money vs. not doing the deal at all? On a 9-month flip, 12% annualized interest is 9% of the loan — factor that into your margins and move on.
I can help you run the numbers on a specific deal to see if hard money makes sense.