The private hard money lender is any person who has money available that he/she uses for investment- most of the time for investment in real estate.  The amount of money available varies- so does the criteria for lending. Loans available from hard money lenders are usually short term. You can use the loan for buying or repairing property.

Contrary to how it sounds, hard money isn't all that hard to find. The catch is in the terms. Remember the financing is coming from private individuals who are looking to make as much profit as possible. The terms are therefore necessarily bordering on the harsh. The loan to values (LTVs) are low, the interest rates higher than market rates. There could be a lot of upfront points too. Compare this to the "other finance" i.e. soft money where the terms are usually easier like a more flexible schedule for repaying the debt. But then both have their separate uses.

Unlike institutional lending, the lending criteria are different for each hard money lender. Each has his preferred areas and investor types. There are lenders who do their own appraisals and they may also charge you for the appraisal. The credit worthiness of the investor is a matter of concern for only some lenders. Some lenders levy inspection fees around repair escrows.

Then there are the two types of lenders- the quantity driven and the quality conscious. You would normally take it as a matter of routine that the lender will lay a lot of stress on your credit situation. This is far from the truth for many private lenders. If the debtor defaults, the property anyway goes to the lender. Thus their primary concern is the value appreciation of the property- can it fetch an amount equal to or higher than the money invested? That said, it doesn't mean that the lender is waiting for a chance to seize your property and resell it. That spells hassle for them too. The point here is that security, in terms of the debtor paying off the loan, is not the primary concern for many lenders.

There are situations where the standard terms of institutional lenders may not suit your needs. Chances are that you can find a loan that matches you from among hard money lenders. There are the tough guys and there are those that will walk the distance with you. It is very well possible to create a wonderful win-win relationship with your lender.

A good way to find a hard money lender is to ask investors, attorneys, accountants and insurance agents; they are likely to know hard money lenders due to the nature of their work. However remember that many of these professionals may not be familiar with the term ‘hard money lender'- you may simply ask for a private lender. Some of these professionals with whom you have good ties may be willing to help you with referrals to a hard money lender.

For instance, settlement/ closing attorneys are a regular source of information for me. These are the people involved in preparing loan documents, and thus most know several hard money lenders. Some attorneys who were lending money themselves!

Another place you can seek information is an accountant's office. Accountants deal with many clients who have surplus cash and are looking to invest. Some of these clients may already have got experience selling property or lending. These people are great to approach for a loan. They understand the business and know that real estate paper is very secure. They are also aware that LTV is low and interest rates high for hard money loans. As a result they are ready to lend money for real estate investment. A referral from their accountant can go a long way in winning the trust of this category.

Yet another method is to gather addresses of properties undergoing renovation. Some of these invariably lead you to private lenders who are funding the project. You can then approach the lenders and study their terms. It would help more if the lender has already dealt with property in your chosen area.

Insurance agents specializing in investment property policies are also bound to know some private lenders. In cases where a lender comes into the picture, the policy has to name a "loss payee". Since the loss payee is the lender, the insurance agent has to interact with some private lenders as well. A full time agent should know scores of private individuals who have lent money.

Your mortgage broker might also help you to locate a hard money lender. A good mortgage broker who works regularly with investors should have ties with a hard money lender. The mortgage broker might charge you for a referral. I would still advise you to go for it if it means a worthy deal.

A hard money lender can be of great use to a beginner investor with limited resources. Apart from funds, a seasoned hard money lender on your side offers the benefit of experience. With these resources, you can go ahead with confidence to purchase a property and repair it after purchase. Some lenders might even be willing to help with holding costs.

Lastly, you would typically find some of these professionals at your REIA and that would be another resource to locate a Private Money Lender.