Amovement is currently underway in the private real estate lending space to phase out the term hard money once and for all. Long gone are the days of what hard money used to be, with shady loan-to-own business practices, sky-high interest rates, astronomical points, and visions of mobsters ready to break your kneecaps if you didn’t pay on time.
It’s more than fair to say that hard money has become institutionalized, and grown into its new moniker of private lending, however, so many in the industry, lenders, brokers, and clients alike, are hesitant to let go of that long-standing phrase. With the strides this industry has taken over time, why wouldn’t people want to leave behind that shady past and focus on the positive opportunities that private lending now provides to real estate professionals?
Simply put, its complicated.
The Different ‘Sides’ of the Real Estate Industry
I was recently having a conversation with someone on the residential side of real estate about the semantics of hard money vs. private lending and they pointed out that typically in the residential space, private lending refers to a wealthy individual investor that lends out their own money. It doesn’t reference the bigger private lenders that have saturated the real estate investing space as we know it today.