Depending on who you talk to, most everyone will tell you that private money is just a nice way to say ‘hard money.’  Since the word ‘hard’ just sounds so, well, hard, most investors or brokers think you mean hard money when you use the term private money.  However, the world of private money is expanding so rapidly with the opportunities associated with tight institutional money.  More investors are jumping into the private money game and there is beginning to be a slight difference between private and hard money.

Some of my private money lenders will lend between 12 and 18 percent with points while a typical “hard money” lender lends from 18 and up with points on top of that.  I think with the sudden influx of more private lenders in the scene, my team can safely say there is a difference between those who are strictly “hard money” lenders and those who lend at more reasonable rates.

Another thing I will add to this post is related to choosing who you take money from and through.  One of my primary motivations for starting this blog is to try and keep the private money scene ‘real.’  All legitimate private money brokers and lenders will require a due diligence deposit so don’t be afraid to give them money upfront to get the ball rolling. However, don’t just give due diligence money to any broker or lender unless you’ve first done your own due diligence on them.  Make sure they’ve been in business for longer than a few months. Also, make sure they have some kind of brick and mortar office they are working out of. That always helps!

With so many new private money lenders and brokers entering the scene, you have to pick who you deal with carefully.

I’d be curious to see if there are any hard money lenders or brokers out there who wish to comment on the huge influx of new “players” that have recently entered the private money scene. Any thoughts or comments on this?

Posted by Blake Reese – November 25, 2008