HARD MONEY LENDER VS PRIVATE
The term “hard money loan” is fairly broad and covers an array of different options that exist within
the world of private financing. Hence, it is fairly common for people to use the terms “hard money”
and “private money” interchangeably when applying for financing with a hard money lender in Los
It is true that hard money loans and private money loans are similar, but there are also important
distinctions you should be aware of when considering which loan type is best for you. Before
discussing the similarities and differences between these loan offerings, let’s cover some basics:
Hard Money Loans
Hard money loans are offered by hard money lenders that are part of a non-traditional money lending
community. Essentially, hard money lenders make financing available in the form of a hard money
loan but focus on other criterion when deciding whether to approve a funding application.For
example, hard money lenders tend to focus more on the potential value of a property, the plans
provided by the applicant to fix and flip a property, and other non-traditional factors when deciding
whether to help fund a real estate investment. This is in stark contrast to a traditional bank that usually
focuses on an applicant’s credit score, liquidity, and so forth.
If you obtain a hard money loan from a hard money lender in Los Angeles, the lender will record the
debt instrument against the property. This debt instrument is known as a “deed of trust” in California.
Private Money Loans
Private money lenders, as the name implies, offer privately financed loans to investors. Since the
financing is provided by a private source, there is often no record of any actual debt instrument. When
it comes to working with a private lender, the key to securing financing is having a strong, transparent
relationship with the lender.
Hard money loans and private money loans share many similarities, including:
• Both loan types fa