hard money loans

Fact: Hard Money Loans Could Be a Better Option

There’s a lot of misinformation and misunderstanding out there about hard money loans, but they can be a lot more effective than people think. The problem is that a quick Internet search will return tons of results with headlines like:

  • “What to Watch Out For”
  • “The Pitfalls of Hard Money Loans”
  • “Are Hard Money Loans Worth It?”

When you’re inundated with those as your first search results, it’s easy to dismiss hard money loans for your investing needs. With a bit more understanding, however, hard money could prove to be the ideal funding solution that you’ve been looking for.

When Are Hard Money Loans a Good Choice?

Real estate investors don’t always have the funds to match their drive and passion, yet finding people to invest with them can prove to be a challenge. If you’re in a position where you feel like you could be making a strong business move but you don’t have the means to finance your purchase, hard money loans might be a good choice. In fact, they might be your only choice.

What is it that makes these loans one of the better options? For starters, they’re quick. Most hard money loans can be closed …

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Commercial Real Estate Advisor

Myths vs. Facts: Hard Money Lenders are Unregulated

Hard money loans are a great resource, but they are also one that is often misunderstood. One of the bigger misconceptions about this type of lending is that hard money lenders are unregulated or under-regulated, which increases the level of inherent risk for borrowers. The truth of the matter is that legitimate lenders are regulated, and they provide a reputable financial solution for alternative real estate investments that can’t benefit from traditional funding and home loans.

Who Regulates and Monitors Hard Money Lenders?

They must have a member of the organization that has a valid and current Real Estate Broker License to function as a lender within the guidelines of the law. Any businesses claiming to offer these loans that aren’t registered with the state are not operating within the law and should be avoided at all costs.

In addition to the Department of Real Estate, hard money providers may also be registered or involved with other industry groups and professional organizations. Most lenders understand that they are in a higher risk industry, and therefore may need to offer their potential borrowers more incentive and assurances. They may belong to organizations like the National Hard Money Association or the …

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Commercial Real Estate Advisor

Myths vs. Facts: You Don’t Need a Down Payment with a Hard Money Loan

Those who are just starting out using hard money loans as a commercial real estate investor often wonder whether they actually need to have a down payment. Since hard money lenders are typically companies or private individuals, it’s a natural question to ask. However, there is a lot of misinformation surrounding loans from hard money lenders. Let’s take a closer look.

Hard money loans are asset-based, which means they utilize the property as collateral. Real estate investors often choose these types of loans because they are fast and relatively easy. So, will you need to have a down payment since they aren’t from a bank?

The Truth

You may have heard that you won’t need a down payment with these types of loans, but that’s very rarely the case. The answer, for the most part, is YES. A few hard money lenders out there will not require a down payment, but most of them do.

Typically, you will still need to put down between 25% and 35% when using hard money financing. This is because the lenders still want to minimize their risk and like to see borrowers with some “skin” in the game. In addition, when you provide …

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Commercial Real Estate Advisor

Hard Money Loans – Myths vs. Facts

In our new series of blogs, we’re going to delve into the most common myths and facts behind hard money loans and how they work. Our goal is to help you dispel the myths and provide the information that you need to make an educated decision about your lending options. The first topic is one of the most common misconceptions about hard money lending:

Only People with Bad Credit Get Hard Money Loans

Because the terms of a hard money loan are more flexible, they may be a better choice for people who have less-than-perfect credit. However, there are a number of different people who can benefit from the quick and flexible funds offered by a hard money loan, including those whose credit is perfectly acceptable for other types of financing. In fact, on most lists of reasons to consider hard money financing, credit scores are at the bottom.

Who Else Can Benefit from Hard Money Loans?

In order to better understand just who can benefit from these loans, it helps to explore and understand their most common uses. These are circumstantial loans, after all, and it will be important to determine whether or not this is a good funding …

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Hard Money Lender

The Hard Money Closing Process

Hard money loans offer a quicker transaction than you’d get with conventional mortgage lending. The requirements for a loan are simple, as well, and the closing process is typically going to be much easier because there is much less paperwork involved. In order to make sure that the process goes as smoothly as possible, you should prepare yourself and know what to expect at the closing table.

The hard money closing process can involve the following types of documentation:

Promissory Note

This is a simple agreement of the payment terms of the loan, including dates and amounts of payments agreed upon. There will also be rules regarding how the trustee operates on both the lender and borrower’s behalf. It is essentially an IOU from the borrower to the Lender.


Often, people refer to a loan as a “mortgage,” but a mortgage is not actually a loan. The mortgage is a contract between the borrower and the investor, which pledges the property as collateral or security for the loan.

Closing Statement

This statement is required by federal law, and will disclose all of the fees and costs associated with the transaction. It is designed to make sure that all payments, …

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$500,000 First Mortgage – Single-Family Investment – Milford, CT


$500,000 First Mortgage – Single-Family Investment – Milford, CT

This deal was an odd one from the start. The borrower came to H&O Capital Funding looking for $500,000 on a $1,300,000 purchase price, with the seller holding the balance as a second mortgage. Because the seller illegally re-configured the home to a four-family home, both he and the borrower/buyer understood that conventional financing was out of the question. Not only was the home non-conforming with the CO, the buyer was trying to do a Reverse 1031, which just added another wrinkle to the deal. While things took some ironing out, the deal was still able to close in just three weeks.

H&O Capital Funding  has helped countless real estate buyers, sellers, lessees and lessors achieve their goals. Our legacy is unwavering commitment to the communities we serve. Houlihan & O’Malley Commercial Real Estate Services specializes in four distinct, yet overlapping, areas of business: Commercial Brokerage services, Private Mortgage services, Appraisal Services and Advisory services.

For more information on loans that we offer, visit our website.


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Property Types for Hard Money Loans

Hard Money Loans can work for most property types including:

  • Multi-Family Properties – These are a lender’s dream as the perception is that housing is always going to be in demand, which helps ensure very low vacancy rates. Lenders only major concern is whether or not the income generated by the property can service the debt service.
  • Commercial Properties – Retail or office properties have the potential to generate large amounts of income, but they can also be extremely difficult to stabilize if “anchor” tenants are lost. Lenders generally look for stabilized properties with long-term leases in place. That being said, retail has been hit hard across the country and most lenders are being more cautious with this property type. The loan to value ratio lenders feel comfortable with is down as compared to recent history (10-30 years ago).
  • Industrial/Warehouse Properties – With all the recent development of apartment complexes across the country, some of which built in former warehouse/industrial zones, the warehouse/industrial market has seen a boom in pricing recently. Simply put, it’s difficult to find a good warehouse property that is centrally located these days. The few that still exist are bringing in some very high prices. Lenders

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