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Hard Money

Hard money is cash proceeds from a loan.  This is a common term used in Canada and United States.  In the world of commercial real estate, hard money developed as a last option for real estate owners seeking capital against the value of their holdings.  In the last 1950’s, the industry began.  This is when the credit industry in the US underwent drastic change.

Hard money loans are usually issued at much higher interest rates than typical 

residential or commercial property loans and are usually not issued by a deposit institution, such as a commercial bank.

Similar to a bridge loan, the two have qualities that are very alike.  However, the main difference is that a bridge loan usually refers to an investment property or commercial property that could be in transition but not qualifying for typical financing.  Although hard money usually refers to not only a loan based on assets with an is high, but can also indicate that foreclosure proceedings are occurring.

Collateralized against a quick-sale value of a property for which the hard money loan is made, a hard money loan is a type of real estate loan.  The majority of lenders fund in a position that means that in case a default occurs, they are the first creditor to receive payment.  This is known as first lien position.  Sometimes, the lender will subordinate to a different first lien position loan, which is also referred to as a second lien, or a mezzanine loan.

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