Hard money can be a great solution for real estate investors that cannot qualify for cheaper loan options, but are confident that they have found a great project that will yield a good profit despite the higher cost of the hard money loan.

It is imperative that the investor truly understands the “Terms and Conditions” of the loan.  It is highly important to know if interest is calculated on the outstanding loan balance or commitment amount, what type of fees will you be charged if loan is not paid off at end of initial maturity, what is reported on your credit report, what inspection, release, application and other fees are there associated with the loan, and what happens if you cannot get loan paid off in a year or more.

We always advise clients to ask many questions to know what will happen if the project goes as expected and the loan is paid off in agreed upon time frame.  However, it is even more important to understand what happens if there are delays or bumps in the road.

Read this article to learn about hard money lenders versus hard money partners.

Hard Money Lenders vs. Hard Money Partners