Hard Money: An avenue for New and Prospective Clients

Hard money can be a great lending tool that most residential mortgage originators aren’t aware of. Some might confuse it with predatory loans, but hard money lenders support the development of real estate and aren’t difficult to deal with these days.

last updated Sunday, July 13, 2025
#Hard Money Lenders #Local Lending

by John Burson

Hard Money: An avenue for New and Prospective Clients

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Hard money can be used to construct single-family homes and as a rescue remedy for residential loans that have fallen due to low credit scores. Since hard money is used when securing short-term loans, originators prefer using hard money on the front-end closing for long-term loans.

Insights on local lending

To partner with investors, it's essential to source reliable hard money. You can achieve this by trying to source locally, as there are great benefits to be gained from working with someone local to finance your projects. Additionally, it is essential to develop a close relationship with your lender, as they play a significant role in their underwriting process. In cases where you have a limited budget, it's easier to work out a solution with them, given that they operate as a national lender compared to a mom-and-pop shop.

Local lenders can help homeowners close a deal more quickly without raising red flags, but they still pose some disadvantages. One of the downsides is that they sometimes run out of funding, unlike single-family homes. For those new to single-family investment, you must find your local area real estate investors club online.

The funding question

When you meet them, ask any moneylenders how they obtain their funding. People make assumptions about where to source cash, but it's essential to understand whether you are dealing with a privately funded lender. Those who are not privately funded will most likely be using banks or other financial institutions, which is a way of saying they have a lot of money.

Originators know that when clients are handed over to complicated lenders, such borrowers can't trust the vetting process and would seek other alternative investment options the next time they need a loan.