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Friday, April 13, 2012

What Are Private Money Loans?

There is a lot of confusion and misconceptions surrounding what is meant by private money loans, which is also referred to as "hard money loans".

The basic premise of private money lending is that private individuals with money to invest often loan that money, generally on real estate secured transactions, with the intention to receive a fair return (based on risk) on their investment.

Some private investors go on to form a corporate entity, and utilize lines of credit as a source for the funds that they loan - and this is where the boundaries begin to become a little hazy (as these private investors may begin to look a little like institutions).

One defining characteristic of private money is the process and criteria by which the funds are allocated to loans. Private money is quite different than institutional money in the many ways which will be covered at another time.

Currently, loans are being made in Georgia, Montana, Oklahoma, Alaska, Wyoming, Texas, Nevada, Colorado, New York, Idaho, California and Florida.

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  1. Private--or “hard money”--lenders are private individuals with surplus money available for investment. Some have deep pockets while some have limited resources. Based upon their own personal criteria, they lend this surplus money, primarily on a short-term basis, to real estate investors who use it for a variety of profitable purposes including buying and repairing distressed properties.

    private money loans

  2. Private money is a commonly used term in banking and finance. It refers to lending money to a company or individual by a private individual or organization.

    private lenders