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Why Should I Use Hard Money Lenders?

April 30, 2019
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You and your friend are walking your dog. At the end of the street you spot a sweet little tudor home. You can tell it was once a great house, and with a little TLC it could be even greater.

“I should call my bank,” you say. “I’m seeing a lot of potential here.” You’re about to dial when your friend says, “Nah, use hard money lenders instead. They’ll know how to handle this.”

If you’ve considering buying an investment property, you should know that hard money lenders are the best lenders to work with. Read on to see why.

Get the Hard Money Loan You Need

Hard Money Lenders don’t charge exit fees.

A Quick Review

In basic terms, hard money loans are short-term loans used in real estate deals. They are often funded by hard money lenders (also called private lenders).

Hard money lenders offer short loans. They typically last about 1-3 years. Usually, a borrower like yourself would only make payments on the interest of the loan. You’d pay off the full amount later on, usually when the property is sold.

The amount hard money lenders lend is based on the current value of the property.

Benefits of Hard Money Lenders

There are many benefits to working with hard money lenders. These benefits are:

  • Timing
  • Loan length
  • Approval

Below we’re going to go through each piece to show why hard money lenders are your best bet when it comes to investment properties.


When it comes to investment properties, timing is key. As you may recall, banks can move at a glacial pace. They can sometimes take up to 45 days to approve a loan.

By the time you get money for your investment property, another investor might have already bought it and started renovations. With hard money lenders, your loan is approved within 1-2 days and is usually funded within the week. Could you honestly say that your bank could move that fast?

And what about loan length?

Fix and Flip Your Life Today!

Hard money lenders are more likely to approve loans for investment properties.

Loan Length

As you may recall from buying your own home, bank loans last anywhere from 15-30 years. Their loans last that long for two reasons. First, banks know borrowers have a better chance of making the payments. Second, they love and live off the interest.

Let’s say you did call your bank and managed to get the loan funded in time. Then, after spending the better part of the year fixing the house up, it sells. You think you’re all squared away when you get news no one wants to hear: You still owe money. How?

According to, banks love to penalize people for paying things off early. These punishments are called exit fees. They are often based on what you had left to pay off. So if your renovations turned out to be a snap to do and the property sells quickly, you could be paying thousands in exit fees.

Hard money lenders don’t charge exit fees. That’s because their loans are short from the get-go. They go into the loan knowing that you’ll pay it off quickly. That’s why you only pay interest during the loan and the principal when the property sells.


As we’ve talked about before, banks like sure things. They rarely take on risky loans unless they know for sure it will end in their favor. So when they look at property you want to fix and flip, they don’t think about what it could be. They think about what it is.

Banks see the rotting wood, the broken windows, the mold growing in the bathtubs. Hard money lenders see potential.

Have you ever watched “Fixer-Upper”? In every property Chip and Joanna show off they always mention their prospective plans. They wax poetic about what the home could be. That’s because Chip and Joanna, like hard money lenders, know a property can change. They see through the mold to find the marvelous within.

That’s why hard money lenders are more likely to approve loans for investment properties.

Work with Great Hard Money Lenders Like Gauntlet Funding Today!

If you’re interested in hard money lenders and want to know more, look no further than Gauntlet Funding.

Gauntlet Funding offers the most competitive rates in the market for prime borrowers with no prepayment penalties. We have an organized and transparent system that will get you funded fast once you have undergone the approval process! Contact Gauntlet Funding today at (631) 465-2161.

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