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Hard money vs private money: the difference
The terms are often used interchangeably, but there is a difference in who lends and how. Here is how they compare.
Get my termsHouston hard money lenderHard money vs private money in one paragraph
Hard money usually means a professional lending company that makes short-term, property-based loans on standard terms. Private money often means an individual or small group lending their own funds, with terms negotiated deal by deal. Both lend on real estate deals rather than mainly on income. Houston Private Money is a private lender that operates like a hard money lender: standard terms, fast closings, 100% of purchase and rehab up to 70% of ARV.
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Estimate only. Loan amount is the lower of 100% of purchase plus rehab or 70% of the sale price when finished (after-repair value). Minimum loan $150,000. Business-purpose loans on investment property.
Side by side
| Hard money lender | Private money lender | |
|---|---|---|
| Who | Lending company | Individual or small group |
| Terms | Standard programs | Negotiated per deal |
| Speed | Days | Varies |
| Scale | Repeat deals | Limited by their capital |
| Cost | Rate plus points | Varies widely |
Which one to use
- Use a hard money lender for speed, repeatable terms and many deals
- Use private money when you have a trusted partner with capital
More: private money lenders in Houston and what is a hard money loan.
Questions investors ask
Straight answers about hard money vs private money.
Is private money the same as hard money?
Often used the same way, but hard money usually means a lending company and private money often means an individual lender.
Which is cheaper?
It depends. Private money from a partner can be cheaper or more expensive; hard money has standard pricing.
Are you hard money or private money?
A private lender with hard money style terms: 100% of purchase and rehab up to 70% of ARV, closing in about 5 days.
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