Hard Money Loans

Some Deals Cannot Wait for a Bank

Early in my career, I understood something important about real estate: the best deals move fast. They come from off-market relationships, distressed situations, auction opportunities, and motivated sellers who need to close now. The investors who build real wealth are the ones who can move when those opportunities appear.

Hard money lending exists for exactly that situation. It is not a loan of last resort. For the right investor and the right deal, it is the most powerful tool in the financing toolkit because it values what matters most: the asset itself, and the ability to move quickly.

I have worked with investors at every stage—first fix-and-flip to seasoned portfolio builders. What they had in common was a deal that a bank could not touch on the timeline they needed. If that is your situation, I want to hear about it. Hard money is a specialized space; the difference between a good lender and a bad one can mean the difference between a profitable deal and a painful one. I will help you find the right one.

When Does a Hard Money Loan Make Sense?

Fix-and-flip: The most common use. You need to purchase a distressed property fast and fund the renovation. Banks will not finance significant deferred maintenance; hard money lenders lend against After-Repair Value (ARV).

Bridge financing: Fill the gap between where you are and permanent financing—e.g. buying before your existing property sells, acquiring a property that does not yet meet conventional or DSCR requirements, closing quickly while permanent financing is arranged, or buying out a partner.

Distressed properties: Homes with deferred maintenance, fire or flood damage, or code violations often will not pass conventional appraisals. Hard money focuses on value, not condition.

Time-sensitive acquisitions: Auctions, probate sales, off-market deals—sellers who need to close in 10 days cannot wait for a 45-day conventional process. Hard money can close in that window.

Non-bankable borrowers with strong deals: If you have excellent deal judgment but imperfect credit or complex tax returns, hard money evaluates the deal first and the borrower second. Construction and ground-up development are also available through some hard money lenders with draw schedules.

Hard Money Loan Structures and Costs

Terms: fix-and-flip 6–12 months, bridge 6–18 months, construction 12–24 months, commercial 12–36 months. Rates are 9–14%+; interest-only payments are common. Points: 1–4 upfront. Extension fees (0.5–2%) if you need to extend past maturity. Many loans have no or minimal prepayment penalty. Draw schedules for renovation: initial draw at closing, progress draws as milestones are verified by inspection ($150–$300 per inspection), final draw at completion.

Full cost breakdown: origination points (1–4), interest, appraisal or BPO ($400–$5,000 depending on type), title/escrow, lender doc fee ($500–$1,500), draw inspection fees, recording. Total cost is real—but for the right deal, the math still works. I will help you pressure-test the numbers with financing cost built in from the start.

Fix-and-Flip Deal Analysis and the 70% Rule

Many investors use the 70% rule as a quick filter: Maximum Purchase Price = (ARV × 70%) − Renovation Costs. A full deal analysis includes purchase price, closing costs, points, interest over hold period, renovation plus contingency (10–15% buffer), draw fees, holding costs, and selling costs (6–8% of ARV). Target 15–20%+ of ARV profit for a healthy deal. I will run the full analysis with you before we talk financing. A hard money loan on a bad deal is still a bad deal—my job is to help you win on the deal itself.

Hard Money and the BRRRR Strategy

BRRRR: Buy, Rehab, Rent, Refinance, Repeat. Use hard money to acquire and renovate; then refinance into a DSCR or conventional loan once the property is stabilized. The refinance is based on the new appraised value—you pull out equity and recycle it into the next deal. Southern California supports this strategy with strong rental demand and accessible DSCR refinancing. I help you structure the hard money for acquisition and rehab, then transition you into permanent financing when the property is ready.

How the Hard Money Process Works with Me

Step 1 (same day): Deal review call—you bring the numbers; I assess ARV, LTV, exit, and feasibility. Step 2 (days 1–2): Lender matching—I submit to the right lender for your deal type, size, and speed. Step 3 (days 2–5): Term sheet; we review and negotiate before you accept. Step 4 (days 3–7): Application—ID, purchase contract, scope of work, contractor info, entity docs if LLC, proof of funds. No tax returns or W-2s. Step 5 (days 5–10): Appraisal or BPO to confirm value and ARV. Step 6 (days 10–21): Closing. Well-prepared deals in SoCal can close in 7–14 days.

Is a Hard Money Loan Right for You?

Hard money is a strong fit if: You are doing a fix-and-flip or need to close in 7–21 days; the property does not qualify conventionally due to condition; you have strong deal instincts but less-than-perfect credit; you are doing BRRRR and need bridge financing; you are a commercial investor with a distressed or transitional asset; or you are competing against cash and need a fast, certain close.

Hard money is not the right fit if: You are buying a primary residence (hard money is investment-focused); the property is move-in ready and qualifies for conventional or DSCR (use the lower rate); you are uncertain about renovation costs or exit (hard money on a bad deal makes things worse); or you cannot afford the higher interest payments or possible extension fees.

Hard money is a tool, not a strategy. The strategy is your deal, your exit plan, your scope. Hard money finances that strategy. If the strategy is solid, hard money can change your trajectory. If it is shaky, hard money just accelerates the problem.

Hard Money Loan FAQ

What credit score do I need? Most lenders want 550–620 minimum; emphasis is on the deal. A strong deal with low LTV can sometimes get approved below 600. A marginal deal is not saved by a 750 score.

First-time flip? Yes. Many lenders work with first-timers; they may offer lower LTV or require a detailed scope. Being prepared—scope, contractor, exit—helps. I have helped first-timers close their first hard money deal.

How fast can it close? In SoCal, a well-prepared deal can close in 7–10 days; typical is 14–21 days. The main variable is appraisal/BPO. If you need 10 days, tell me upfront and I will prioritize the fastest lenders.

Purchase price or ARV? Both matter. Most will not lend more than 90% of purchase price or more than 65–75% of ARV; the loan is the lower of the two. ARV drives max loan size; purchase price sets a floor.

LLC? Yes. Most hard money lenders accept LLCs. You will need formation docs, operating agreement, EIN. Some require a personal guarantee. I will clarify for any lender before you commit.

Project over budget? You bring cash to cover the gap. That is why a 10–15% contingency is essential. Some lenders may consider a modification; not guaranteed.

Cannot sell or refi before maturity? Most lenders offer extensions (0.5–2% of loan amount, 3–6 months). Request before maturity, not after. Default can lead to foreclosure. Manage your timeline carefully.

How do draws work? Renovation funds are released in draws as work is completed. You request a draw; lender sends an inspector; once verified, funds are wired (often 24–72 hours). Typical rehab: 3–6 inspections at $150–$300 each, paid by borrower.