Distilling the Myths of a Hard Money Commercial Loan

For some, hard money lending is surrounded by mystique and distortion. Learn the truth about obtaining a commercial loan

from a private investor or company.

Google hard money lenders and you will see a wealth of information about this commonly used, though often misunderstood avenue for obtaining a business, residential, or commercial loan. One example is the site that suggests the “hard” in hard money lending relates to the fact that its “hard” to get, while another states that it refers to higher than average interest rates. The truth: hard means that there is collateral involved, or a “hard” asset.

It’s truly hard to imagine, but mention the term hard money lender to someone just starting to use real estate as an investment strategy and looking for their first commercial loan, and they think you’re talking about back allies and less-than-stellar dealings. I say, they’ve been watching too much of the Sopranos. Let’s make this perfectly clear: a hard money lender is not a loan shark that carries around a Louisville Slugger. A private money lender is just that, an individual, business, or group of individuals that lend money. It’s that simple. The beauty of a private money lender is that, though regulated, they do not have to go through the same bureaucratic red tape as that of a bank.

Here’s another untrue statement found among the

pages of Google search. Hard money is the last-resort loan. Really?

Well, they will have to inform all the real estate investors, contractors, house flippers and home buyers that have benefitted tremendously from a private lender. Seriously. Hard money lenders look at your collateral, the project you have in mind, and your exit strategy or your plan to pay back the personal or commercial loan. They want you to succeed as much as you want to succeed. To this end, it’s important to be direct, honest and lay it all out on the table. Your presentation should include your business plan, projection and supporting background.

When to Turn to a Hard Money Loan

Investors, contractors and home buyers use hard money loans for a variety of ventures. They use it to put a bid down on a project and have cash in hand—an important attribute in a seller’s market. Contractors use it to for monthly draws during the construction process. Business owners use it for inventory, expansion, to lease new equipment, or for operations, and home buyers take advantage of bridge loans so that they can purchase a new home without having to sell their old home first or make a contingency offer. Some use it to get started on a project while they wait for more traditional loans to come through.

Individuals who obtain hard money loans are not desperate—they are smart business people who have learned the many benefits of working with a private investor instead of a lending institution.

At Level 4 Funding, we have worked years to develop a large number of investors in our portfolio. If you can dream it, we can often fund it. Call us to determine if a hard money loan is right for you.

Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC  Private Hard Money Lender
Arizona Tel:  (623) 582-4444
Texas Tel:      (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701

About the Author:  Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

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