The key to borrowing private money is analogous to game theory.  The more you play a game, the better you get at it.   Similarly, in the world of private money lending, the more you understand how lenders and private investors evaluate your loan, the better the rate and terms you will be able to negotiate with the private money lender who ultimate will fund your real estate loan.

Unless you have substantial assets, and get use them to obtain a conventional bank loan, you will be looking for what is typically referred to as “hard money” for rehabbers.    

Consider the following when looking for hard money rehab loans:

Cost.  Don’t expect the rehab lender to lend hard money based on an as-fixed basis unless you have other assets to offer as collateral. Rehab loans will almost always be based on as-purchased price.  Private investors funding the rehab loans want protection if you buy the property and do not make planned improvements.  

Extent of the Rehab.  Riskier projects which require more substantial work will require lower loan to values.  Hard money lenders are all about risk and reward.  A residential property that just needs carpet and paint is far less riskier than a vacant 20 unit apartment building in which all the units and the main property need an facelift.   

Financials.  The stronger your balance sheet, the more likely you are to obtain rehab loans.  Rehab lenders want strong borrowers. If the project under consideration is your first one, you will likely want an equity partner to build a track record and help you get started.   

Other Loan Costs.  Private investors investing in rehab loans want to know they will make a certain return on their funds.  Expect to commit to use the funds for a fixed period of time or pay a additional costs. Rehab loans are a great way to earn a high return on real estate because it enables you to complete rehab projects you otherwise could not.    Use our directory of rehab lenders to find rehab lenders who can fund your specific loan request.   

But this guide is more than just lists of hard money lenders.    Use the navigation tabs on the left side and learn in depth how to work in this unique part of the private lending world.  You’ll find tips on how to negotiate the best hard money rates, as well as an overview of roles played by hard money lenders.   

In addition to just basic borrowing tips, you will also find information about how to be a hard money lender, how to make the best loans with your private investor dollars and how to eventually become a hard money lender. 

Loans of all types are reviewed in this private money guide, including specialty loans such as bridge loans and rehab loans.    Bridge loans are available for real estate investors looking to bridge from one loan to the next.  Typically the bridge loan is at a higher rate because its a bit more risky.  But once the project is underway, or complete, a more conventional lender can be found with better rates and terms.  The funds from the new loan pays off the bridge loan.  This type of loan is sometimes referred to as a “take out loan” and is used by real estate rehabbers and commercial developers for many real estate projects.