9 out of every 10 millionaires in the world amassed their fortunes through real estate investment.

The great thing is that it’s easy for anyone to venture into real estate investing with debt. Yet, as a beginner, it is hard to distinguish between hard money vs private lender. You may make the mistake of assuming these two loans are the same thing.

Yet, they’re not!

Read on to know the difference between hard money and private lender.

What Is a Hard Money Lender?

What Is a Hard Money Lender

Hard money lenders are private institutions that offer short-term financing for real estate deals. These lenders pull money together into a collective from different people. So, these lenders disburse money to real estate investors from this pool.

To protect the people who contribute to this pool, the government requires hard money lenders to obtain licensing. The idea is to ensure that hard money lenders adhere to various regulations when disbursing loans. And that’s why many hard money lenders are regional as they have to get licensing to operate in a given state.

These lenders operate differently from traditional lenders such as banks as they don’t follow common lending standards. They don’t check credit scores or require numerous documents to approve loans. However, they’re required to access licensing to offer hard money loans and adhere to the established regulations.

These lenders focus more on loan applicants providing collateral to access credit. To know more about hard money lenders, use resources like trinitymortgagefund.com. You’re seeking information on how to apply for hard money loans.

Also, you want to know the cost of a hard money loan and the application requirements.

What Is a Private Money Lender?

What Is a Private Money Lender

Private money lenders are often individuals lending out their personal money to real estate investors. So, these lenders often pull out funds from their retirement savings, investment savings, or IRA. Usually, you’ll issue out a promissory note to these private money lenders when disbursing the funds.

So, if you opt for this financing option, you must learn how a promissory note works. Also, seek ideas on how to find private money lenders near you. The great news is that anyone can become a private money lender.

The reason is that you don’t need any licensing to lend out your money to real estate investors.

So, the big difference between hard money lenders and private money lenders is the source of funds. Hard money lenders create a pool of funds from different people where private lenders loan out their own money.

Review Hard Money vs Private Lender to Pick the Perfect One for You

To become a great real estate investor, you must learn how to utilize debt. So, rely on the above tips to know more about hard money vs private lender. You want to know more about who offers hard money loans and private money loans.

The idea is to go for an easy-to-access and cheap loan to finance your real estate investment.

Please see our other articles for more Real Estate Loans, Buying, and Selling tips.

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