Borrowing private money
Start with how this market works, then what lenders ask for, then how to negotiate and how to avoid the people who will take your money and disappear.
Hard money and private money confuse almost everyone the first time. The words get used interchangeably, the terms look steep next to a bank loan, and nobody explains why a lender would charge what they charge.
This path goes in the order the questions come up. First, who is on the other side of the table and what they are protecting. Then the five things a lender looks at in any loan. Then what you can negotiate, and the red flags that tell you to walk.
Some of the articles are several years old. The rates in them are history, but the way lenders think has changed much less than the rates have.
Hard money lending: What is it and why is it misunderstood?
Article, 2015A long conversation with the president of a trust deed investment firm who has worked in asset-based lending since 2004. It is from 2015, so skip the numbers. What lasts is hearing how a lender thinks about risk.
Talking Loudly: The History of Hard Money
Article, 2020Short, and more useful than it sounds. Hard money is one of the oldest forms of credit there is, and the history explains why the terms still look the way they do.
Hard Money Loans Demystified
Article, 2021Clears up a common mix-up: hard money loans and fix-and-flip loan programs are two different products that people treat as one. About a five-minute read.
Introduction to the 5 C’s of Lending
Course lesson, 2023, 06:50The first video in a short course on how a lender judges a loan: collateral, credit, cash, character and credentials. The introduction runs under seven minutes, and none of the lessons after it is longer than ten.
Private Lending: How to Receive the Best Loan with Damon Riehl
Event replay, 2022, 48:38A 48-minute session on finding the best loan for your particular deal, with a read on where short- and long-term loans stood in 2022.
3 Negotiation Strategies for Working with Hard Money Lenders
Article, 2018Starts from the idea that you negotiate better once you understand what your lender is trying to accomplish, then gives three ways to lower project costs and finish faster.
Avoiding Fraudulent Hard Money Lenders
Article, 2024A list of red flags for fraudulent lenders, from 2024. It is long, about 2,100 words, and worth reading before you send anyone your documents.
Scale Safely with Private Money
Article, 2020For the point where banks stop saying yes. Covers why scaling comes down to money, and what to think through before you lean on private capital.