Hard Money Lenders Online

What is a Hard Money Investor?

A hard money investor is one of the best compensated people in the real estate and loan business. There are actually two ways one can get into the hard money investment game. One way is to make hard money loans yourself. The other way is to invest your money in a company or LLC that specializes in hard money loans. Either way you look at this investment opportunity, it is a good return on a safe investment, if the hard money is loaned and managed correctly. In the economy today, there is a huge demand if you are a hard money investor.

The mechanics of hard money lending are actually quite simple. A hard money loan is a loan made on real estate to a borrower who is in some form of financial crisis. At first glance, that does not sound like a very sound investment and one would be crazy to lend money to someone who was in financial trouble. However, the hard money investor will always make sure that the money he invests will produce a very good return and will be quite safe.

No matter how you make your hard money investment, on your own or through a group of hard money lenders, the rules are the same. The first rule of the game is that the return on your investment will be a high interest rate with quite bulky fees at the front of the loan. The reason that the money demands such a high return is that it is usually lent to someone who is behind on their mortgage or has bad credit and needs money desperately for one reason or the other. The typical fees are about 5 to 7 points on the front of the loan and the interest rate is from 11% to 19%.

Here is where the money is secured. The hard money lender will not lend an amount in exes of 70% of the property value, and will want a 1st lien position on the property. This will insure that if the borrower defaults, he will be able to foreclose and sell the property to safely get his money out of the deal. In some instances the property will sell for over 70% of the value and that will all be profit. Not a bad deal. If you have extra cash and want to make a little money, look into becoming a hard money investor.