Hard Money Lending Explained (with Chris Bennett)

Hard money lending can be a powerful tool in the right situation, but it’s often misunderstood. In this conversation with Chris Bennett, we talk through how hard money loans work, when they make sense, and what buyers and investors should consider before using one.

What Is Hard Money Lending?

Hard money lending is a form of short-term, asset-based financing secured by real estate. Unlike conventional bank loans, which are underwritten based on a borrower’s credit score, income history, and debt-to-income ratio, hard money loans are evaluated primarily on the value of the property being used as collateral. If the deal makes sense (meaning the property supports the loan amount) funding can happen in days rather than weeks.

In Las Vegas and Henderson, hard money is commonly used by real estate investors, house flippers, developers, and buyers who need speed or flexibility that traditional lenders cannot provide.

When Does Hard Money Make Sense?

Hard money is not the right fit for every situation, but in the right scenario, it can be the difference between getting a deal and losing it. Common use cases include:

• Fix-and-flip projects where the investor needs to close quickly and plans to repay the loan after renovation and sale.
• Bridge loans for borrowers who need to close on a new property before selling an existing one.
• Construction and development where a project doesn’t yet qualify for permanent financing.
• Credit or income challenges where a borrower can’t meet conventional bank requirements but has solid collateral and an exit strategy.
• Time-sensitive purchases where a conventional 30–45 day close would cost you the deal.

What Does Hard Money Cost?

Hard money rates are higher than conventional financing, typically in the range of 9–13% annually, depending on the lender, property type, loan-to-value ratio, and borrower experience. Lenders also charge origination points (usually 1–3% of the loan amount) and may include fees for appraisals, processing, and documentation. These costs reflect the speed, flexibility, and risk the lender is taking on.

For an investor using hard money to acquire and flip a property, the higher borrowing cost is typically offset by the speed advantage and the profit margin on the deal itself. The math has to work, and a good lender or advisor will help you stress-test it before you commit.

Hard Money vs. Private Capital: What’s the Difference?

The terms are often used interchangeably, but there’s a distinction. Hard money typically refers to institutional or semi-institutional lenders with standardized programs. Private capital (such as trust deed investments through All Western Mortgage Private Capital) involves individual accredited investors or small funds lending against real estate. Private capital can be more flexible on terms and structure, and is often a better fit for complex or non-standard scenarios. Beau facilitates both and can help you identify which path fits your deal.

Frequently Asked Questions

Can I use hard money to buy a primary residence?
Hard money for owner-occupied primary residences is subject to additional federal lending regulations (Dodd-Frank) and fewer lenders offer it. It is more commonly used for investment or non-owner-occupied properties. There are lenders who specialize in owner-occupied hard money situations, Beau can point you in the right direction.

How quickly can a hard money loan close?
Many hard money lenders can fund in 7–14 business days once documentation is complete. Some can move faster. This is the primary advantage over conventional financing and why it’s used in competitive acquisition scenarios.

What loan-to-value ratio do hard money lenders use?
Most hard money lenders lend up to 65–75% of the property’s after-repair value (ARV) or current as-is value, depending on the deal type. This conservative cushion protects the lender (and you) if the exit strategy doesn’t go as planned.

Is hard money lending legal in Nevada?
Yes. Hard money lending is a legitimate, regulated form of financing in Nevada. Lenders must be properly licensed, and all loan terms are disclosed per state and federal requirements. Always verify your lender’s licensing before proceeding.

Key Takeaways

• Hard money is asset-based financing, the property value matters more than your credit score.
• Best suited for investors, flippers, developers, and time-sensitive deals where conventional financing won’t work.
• Rates are higher (9–13% typical), but speed and flexibility justify the cost on the right deal.
• Private capital offers similar speed with potentially more flexible terms for complex scenarios.
• Always stress-test the numbers before committing to ensure the deal works at the cost of the capital.

Interested in hard money or private capital financing for a Las Vegas real estate project? Explore Beau’s Private Capital page or reach out directly to discuss your scenario.