Private & Hard Money Gist

“Hard money lending is asset-based, short-term financing secured by real property. The lender cares primarily about the property's value and your exit strategy — not your W-2, tax returns, or debt-to-income ratio. It's expensive because it's fast, flexible, and available when nothing else is.”

“Hard money cost has three components: origination points (1-4% upfront), interest rate (10-14% annually), and extension fees if you exceed the initial term. Together, they typically consume 12-18% of the loan amount over a 12-month project.”

“The most dangerous moment in a hard money deal is when the term expires and your project isn't complete. Without a pre-negotiated extension or a refinance exit ready, the lender can call the loan — forcing a distressed sale of an unfinished property.”

“Hard money comes from institutional lenders with standardized products. Private money comes from individual investors — often with more flexible terms, lower rates, and relationship-based underwriting. Building private money relationships is how experienced operators reduce their cost of capital.”

“Every hard money or private money deal must have a clear exit strategy before the first dollar is borrowed. The exit hierarchy — sale, refinance, extension, partner buyout — should be planned in order of preference with timelines attached to each.”