Hard Money Lender vs Private Money Lender – what’s the difference?
Although often times a Hard Money lender can also call themselves Private Money Lenders and vice versa – we will briefly look at what makes them similar vs different in this article.
Hard money lenders tend to be companies with more formal business processes and extra support systems. Meanwhile, private money lenders are usually individuals lending their own funds with or without a business structure.
Hard money lenders tend to specialize in real estate loans, while private money lenders may have varying levels of real estate and lending expertise.
Hard money lenders generally have more standardized loan terms, rates, and qualification criteria, while private money lenders can be more flexible with their terms and requirements on a case-by-case basis.
Hard money lenders are easier to locate as they advertise their services while private money lenders are often found through personal networks or referrals.
Hard money lenders typically have stricter underwriting and charge higher rates to compensate for risk. You may find private lenders willing to take on more risk for relationships, or offering more favorable terms based on the asset.
The overlap between the two makes it easy to confuse the difference. At Rosegate Capital, I find myself somewhere in that overlap. I’ve been doing this long enough to have a formal process and back office system, but you won’t find me doing national market campaigns since I’ve been fortunate enough with repeat business through my relationships and networking. Heck, it’s taken me this long to get a website! And like a private lender, at the end of the day, it’s the relationships that make up my business.
If I can help you in your investing journey, feel free to reach out -there’s no loan officer on the other end. Just me 😉
