Hard money is a short-term loan from a private or specialty lender, underwritten primarily against the property's value rather than the borrower's income or credit history. It is the standard fuel for flips and BRRRR purchases: fast to close, flexible on condition (a bank will not lend on a house with no working kitchen; a hard-money lender expects exactly that), and expensive — higher interest rates, origination points, and terms usually measured in months. It is a tool for deals that will be sold or refinanced quickly, and a trap for deals that linger.
The formula / structureCost drivers: interest (often interest-only, monthly) + points at origination + fees, over a short term — total cost depends heavily on how fast you exit.
Hard Money: a worked example
Worked example. A $120,000 hard-money loan at an example 11% interest-only costs about $1,100/mo, plus 2 points ($2,400) paid at origination. A 6-month project pays roughly $9,000 in interest and points; the same loan on a project that drags to 12 months pays about $15,600. Speed is literally money with this tool. Rates and points vary widely by lender and deal — these are example figures.
What affects Hard Money
- Loan-to-value and after-repair-value limits the lender sets
- Borrower track record (experienced flippers get better terms)
- Property type and market
- Timeline — cost compounds monthly
Get the First-Deal Math Pack — free.
The Math Sheet, the MAO one-pager, and the comping checklist — the one-page math we run before any offer.