When Is The Best Time To Use Private Or Hard Money?

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When Is The Best Time To Use Private Or Hard Money

Deciding to use private (or hard money) for your real estate investment properties can be a complex and intimidating process. With many factors to consider, you must understand when private or hard money financing may be the best option. Whether you’re an experienced investor or just getting started, understanding when to use private (or hard money) and other funding sources more appropriate are vital for closing deals and achieving financial success. 


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This blog post will give investors the knowledge they need on when private or hard money should be considered an option for financing investments. There are myriad reasons to look at using hard money. You’ll most commonly need to look for private or hard money lenders if you:


Table Of Content:

  1. Have bad, thin, or no credit
  2. Need to move quickly
  3. Need the money for rehab
  4. Need a loan for only a short time
  5. Need the money for other projects
  6. Have reached the maximum number of loans in a bank
  7. Need to leverage your available cash

Have bad, thin, or no credit

If you have a poor or non-existent credit history, private money lending can be a great option to consider. Private lenders have fewer restrictions on who they loan to and can often provide funds quickly. Private money lenders understand that people with bad or no credit history can still be financially responsible borrowers. This means that the process is free of risks: make sure you know all the terms of the loan and compare different offers to ensure that taking out a loan from a private lender meets your needs.


Need to move quickly to close your real estate investment

When it comes to demanding real estate investment property horizons, accessing private money lending can be a helpful tool in your venture capital toolbox. It allows you to close the time gap between engaging with sellers and locking in the investment opportunity. Not only is the process expedited, but it often gives potential investors an edge over the competition. With competitive terms and resources that enable a quick turnaround time, private money lending has become invaluable to investors hoping to move quickly in their real estate investments.


Will need to make significant repairs on the property as a rehab or fix-and-flip

With shorter repayment terms and more quick loan decisions, private money lending may be the perfect solution if you need help covering renovation expenses and want to avoid the long wait times associated with traditional mortgage lenders. Plus, many private money lenders are willing to work with rehabbers and flippers—situations that a typical bank or mortgage company might not fund. Private money lending can offer access to much-needed capital to complete your fix-and-flip or rehab project without delay.


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Need a loan for only a short time, like a bridge loan

Unlike banks, these loans are typically much more flexible and can offer low-interest rates. These loans have just enough time to bridge the gap between one project and the next so that you can get access to capital quickly without worrying about hefty bank fees or lengthy paperwork processes. 


Need the money for other projects that banks have a hard time financing

Private money lending can be the preferable option for those needing capital for alternative investments such as land, construction, or locations with a high rate of defaulted loans. These projects can often be difficult to finance through a traditional institutional lender as they are more likely than not viewed as too risky. Private lenders, however, may be more flexible when considering and approving these higher-risk ventures. 

Consider private money loans if your real estate projects are risky, but as a seasoned investor, you know how to weather the ups and downs.


Have reached the maximum number of real estate-based loans a bank can or is allowed to finance

You will have the flexibility to fuel your real estate investment opportunities even though you have exhausted all your real estate assets for a loan. If the risk is acceptable and the reward worthy for the private lender, you can access the money.


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Need to leverage your available cash for multiple loans/deals instead of going toward just one down payment

Leveraging your cash flow through private money lending allows you to spread your capital across multiple real estate investments, spreading out risk and receiving a more comprehensive range of returns. It’s an opportunity to grow your portfolio with less upfront risk than traditional lenders offer. It allows you to gain more potential upside without fully committing to single significant investments.



As you can imagine, the list goes on. You can find many reasons to access this type of loan and remember that you will always find a private or hard money lender willing to take the deal on if you meet their criteria. Contact us here if you need help getting this type of loan, we’ll be happy to help you!


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Greg Downey

Greg Downey
Hi, I’m Greg Downey! I’m an expert in real estate and passionate about sharing my knowledge with others. I desire to provide valuable and insightful intelligence, inspiring others to get informed and succeed in the real estate industry.