The world of hard money lending is a tight knit one, but one that plays fair with those who act honorably. Still, each lender is trying to maximize their own gains while providing the necessary funding to borrowers. With those two facts in mind, here's what to expect when dealing with a hard money lender:

Seasoned Investing Knowledge

Private or “hard” money lenders are not the mindless paper-shufflers that you find at a traditional lending institution that need to get acceptance for every decision that they make. Instead, hard money lenders are seasoned investors who have been to this particular rodeo more than once and can quickly and efficiently vet a deal that is worthy.

A Wealth of Experience

Most hard money lenders have been in the real estate game for most of their adult life. They understand that many property deals do not fall into the neat categories set by the traditional lending institutions in the industry. Their vast experience, however, allows them to evaluate a deal on its merits, rather than on some arbitrary criteria set up by a lending committee. For this reason, with an unusual deal, you are more likely to find a loan with a private money lender than with a bank.

A Desire for Mutual Trust

The private money lending industry is a reputable one that recognizes the value of secure business transactions. For this reason, hard money deals are structured along the lines of traditional mortgages. That is, appraisals and inspections are done, escrow accounts are established, and standard written contracts are utilized. The whole point of the process being to protect the interest of both the borrower and the lender.

And... A Desire for a Good Return

All of the above benefits do not come without a cost. A hard money lender knows the value of his money, his experience, and his time. Still, when compared to the value brought by traditional lending institutions, private money lenders offer a significant bargain for the borrower.

The Bottom Line

To sum it up, those who borrow from hard money lenders pay less in fees, a comparable interest rate, and enjoy much more flexible terms and response times than those who deal with banks. In particular, hard money lenders are more interested in making a good return on their money through the actual deal than in “nickel and diming” the borrower with excessive fees.