Hard Money Loan
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Hard money loan. A hard money loan is a specific type of asset-based loan financing through which a borrower receives funds secured by real property.
How Hard Money Loans Work
Hard money loans, are short-term lending instruments that real estate investors can use to finance an investment project. This type of loan is often a tool for house flippers or real estate developers whose goal is to renovate or develop a property, then sell it for a profit.
The ability to obtain hard money financing isn’t determined by the borrower’s creditworthiness. Instead, hard money lenders use the value of the property itself in determining whether to make the loan. Specifically, lenders focus on the “after repair value,” or ARV, which is an estimate of what the property will be worth once the renovation or development phase is complete.