My cousin just got a loan and said he had to get hard money.

What is “hard money”?

Hard money is also called private investor money. These are loans that are made by private parties, or investment companies, or even crowd funding sites, to people who cannot get traditional financing. The types of situations where you might need this kind of loan are when there is a credit problem, or the borrower can’t prove their income through tax returns, maybe the property has a problem that disallows traditional financing, or maybe the money is needed quickly (like in 10 days instead of 45). The interest rates you pay on this type of loan can vary from 6-12%, are usually interest-only and short term 1-3 years. It’s an expensive way to borrow, and usually the only way for the circumstances I mentioned before.

If you are an investor, it’s a great way to earn high returns secured by real estate.

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