Private Money Loans in California - Truth About Hard Money Loans
Updated: Mar 27
So many first time investors are curious about hard money lenders. Who are they? What is it? How do I get some? Is it beneficial? Let me share with you some of the basic principals about hard money lenders. First of all, let's determine what the term "hard money" means. When money is discussed between investors, it is considered to either be "soft" or "hard". Typically soft money is easier to qualify for and the terms are flexible. Hard money, on the other hand, is just the opposite. It is much more restrictive. Not in that it's more difficult to obtain, but the terms are very specific and much more strict. They have to be, because most hard money comes from private individuals with a great deal of money on hand. This is why hard money is also referred to as "private money". The money used for investment purposes comes from people, just like you and I, not a typical lending institution. So their first priority is to protect their investment capital. This is why the terms have to be so strict. If it were your money, you would want the same.
Private Money Loans in California California probably has the largest private money lending industry of any state in the U.S., for several reasons:
It has the largest population and the most real estate of any State;
Real estate is priced higher, on average. For example, the median home sale in California in 2013 was more than $400,000, which is much higher than the U.S. national median sales price of $260,000 in January 2014.
California real estate law features “non-judicial foreclosures” which mean that lenders can foreclose relatively quickly if borrowers default. For this reason, California is a good state in which to be a private lender on non-owner occupied homes, thereby attracting a large number of lenders.
Finally, California is a popular place to invest in real estate, creating a large pool of potential private money borrowers. Many Californians prefer investing in real estate to investing in stocks and bonds, whereas on the East Coast a lower percentage of investors are focused on real estate
What We Offer:
We specialize in direct private and hard money lending for real estate investors. Unlike many other private money lenders, we are actively lending money right now; in fact, we have funded more than 300 hard-money loans in the past two years, making us one of the most successful lenders in California, if not the Western United States.
Most of our loans are for between one and five years in term, although exceptions are not uncommon. While most of our loans are interest only, we do also offer amortized loans where the payments consist of both interest and principal.
Rates on our hard money programs can fall within a wide range. Most often rates will range between 10-12%, although rates below 10% are available for the right transactions.
For land loans, construction lending or rehab transactions the rates can vary outside of this range.
Turn times on our loans will range anywhere between one to four weeks. We do have the ability to close very quickly in some situations, while other transactions can take longer. Each transaction is unique, and once we have the opportunity to review your specific deal we will be better able to quote turn times for your hard money transaction.
Credit is typically not a major factor in our hard money lending. While we do require a credit report in a file, we are more concerned about what is in it than your credit score. While credit is not a deciding factor, excellent credit can help us secure slightly more advantageous terms for you.