A hard money lender in the world of real estate is a lending company, or a group of investors who have joined with the purpose of providing funding to brokers, construction development companies, real estate investment firms, or commercial real estate property owners. This type of loan is is based on a collateral, generally property, that has a real, hard value.

The amount of the loan can range between 60% and 80% of the asset's current market value (or 50 to 70% of 'after repaired' value), but will rarely exceed this range as the funding group must be able to realize a profit, should the sale of the property become necessary. In most cases, the hard money lender takes up first lien position in the order of liens against the property, and would become the first entity to be satisfied in the event of any sale.

Private money investors, also known as private money lenders, are non-institutional (non-bank) individuals or companies that lend money—often secured by a deed of trust and a note—for purposes of real estate funding.

Private money investors verses hard money lenders
You must understand the difference between private money investors and hard money lenders. Both lend money for real estate funding, but the two have differing expectations.

Private money investors lend “private money.” You will have a lot of control of the money without interference from the investors providing real estate funding. As long as the investors get a specified amount of return on the money they lend, they will not care about the details of the business arrangement.

​​4 Tips to Consider in Finding the Right Hard Money Lender
Those in the real estate industry can spend days, weeks, or even months trying to find the next investment opportunity. While the lucky ones sometimes find a deal within the first few prospects, others who aren’t so lucky might have to spend several weeks or even months before landing a deal. Even when you find the right investment opportunity, you need to fund it or the deal is as good as dead. An increasingly popular way of getting real estate funding is through hard money lenders (HMLs).

If you're in the marketplace for a loan, you may have come across the term "hard money" lending. Don't let the name fool you; hard money lending is far from "hard"!

What is hard money lending?
Hard money refers to a type of loan in which collateral is the main criteria for the lender. In other words, a hard money lender typically focuses on the borrower's collateral rather than other more traditional factors such as the borrower's credit score, income, and debt-to-income ratio. This practice is advantageous for both the lender and the borrower. For the lender, this kind of lending is relatively secure (at least compared to other kinds of loans) and for the borrower, these loans provide much-needed capital that other investors and banks, for a variety of reasons, aren't willing to provide.