How It Works

 What is a Hard Money Loan & How do they Work?



People seeking to purchase real estate as investment property normally need some form of financing to make the purchase. Very few real estate investors have enough cash on hand to fully pay for their investment, which means they need to find ways of obtaining financing in order to fund deals.


One method for financing the purchase of real estate for investment purposes is to turn to a private hard money lender. Hard money loans - also known as an asset-based lending - are a form of financing in which the borrower receives the funds on the basis that the loan is secured by the value of the investment property being purchased.

Hard money loans are different than the traditional types of loans that banks offer in that the borrower has more leverage, the ability to fund deals more quickly and therefore close faster than with a conventional bank loan. Borrowers can make a down payment of just 10% cash to buy and renovate an investment property. They can get the funds from a hard money lender in as little as 3-10 business days, allowing them to close in less than 2 weeks.

Investing in real estate is highly competitive since there are often multiple offers on the same property, which creates a bidding war among buyers. Being able to get the financing quickly gives that investor a huge advantage in these circumstances. Being able to use less of their own cash for a down payment enables them to better leverage their own money to invest in more properties. And the more properties they buy, the greater chance they have to make more in profits, which can certainly increase their return on investment.


Most hard money loans are considered short-term loans in that they last no longer than one year (with DML Lending our short-term loans go up to 12 months) with the borrower making interest payments every month until they sell the property and subsequently pay the loan off. Investment properties being purchased with hard money loans are non-owner occupied with most hard money lenders willing to lend according to the after repair value (ARV) of the home or property. The ARV is important because the lender must consider the quality and condition of the property and what the risk would be for the firm if they decide to make the loan.


How to Get a Hard Money Loan


If a real estate investor sets out to obtain a hard money loan to invest in property, they would need to approach a hard money lender with enough capital on hand to finance the purchase. Once the investor identifies the property they want, they would then fill out an application for the loan amount and make their way through the underwriting process. At DML lending the underwriting process can take as little as 1-4 business days depending on how long it takes for a borrower to provide all the required loan documentation. 

Once the borrower receives pre-approval for the loan, having met all the guidelines required by the underwriter, the property would now need to be appraised. If the appraisal meets the guidelines for the loan, the deal can now progress on to closing.


The borrower must now gather all the required documents and purchase insurance in order to receive final loan approval from the hard money lender, which would allow the deal to now close. Once the loan closes the funds will be released to the borrower for the purchase, repair, and renovation of the investment property. The term of the hard money loan now begins.


Pros of Hard Money Loans


Here are some of the benefits of turning to a hard money lender to obtain financing for an investment property:


  • Easier to get financing than to apply for a bank loan

  • Offer short-term loans

  • Credit score, not a factor

  • Ability to better leverage their own capital

  • Faster loan approval and closings


Obtaining a hard money loan is a great alternative to trying to get financing through a traditional bank when you are investing in real estate. Real estate investors have more flexibility with DML Lending programs where we fund deals faster and the investor (borrower) can leverage their own money better to buy more properties. This way they can improve their odds of increased profits and a larger return on investment.


Types of Hard Money Loans DML lending Offers


Hard money loans are routinely sought for different types of investment opportunities. Here is a list of the various types of real estate investments that can benefit from a hard money loan:


  • Cash-out

  • New Construction loan

  • Fix & Flip

  • Long-term rental property

  • Multifamily dwelling

  • Construction

  • Transactional Financing


All these loans are for different purposes but can still receive financing from a hard money lender. Investors seeking private money lending can benefit from a variety of DML lending programs that will fit with each individual borrower needs.


Hard Money Loans for Real Estate Investors


Real estate investing continues to be a lucrative endeavor in the United States. The numbers of people now involved in fix & flip investing equals that of the highs enjoyed prior to the housing bubble. This means that fix & flip investors are again making record profits. Hard money lenders trying to get in on these profits are eagerly providing real estate investors with hard money loans.

If you’re interested in becoming a real estate investor here are some tips to ensure that you know what you’re getting into before you make your first investment:


Do Your Research


Learn everything you can about real estate investing and this includes knowing your market. There are different ways that an investor can make money in real estate so study the alternatives to determine which approach would work best in your situation.

You need to have a good understanding of what the costs are to make the various repairs and renovations needed to effectively market and sell your investment property and make a profit. Make sure you know the selling prices of comparable homes (comps) in the same exact neighborhood so that you have a realistic idea of what yours would sell for after rehab.




Attend some meetings of your local Real Estate Investors Association (REIA) to see if you can find a mentor who would be willing to teach and guide you through the process. While there you will find that many of the attendees and speakers have made mistakes and learned from them. If you can get them to share their experiences with you and explain what works best for them, you will be so much better informed when you start. These experienced real estate investors can also make recommendations when it comes to contractors as well as other members of the group that you might find helpful.


Take the First Step


Once you’ve done plenty of homework and learned the basics of real estate investing plunge in and take your first step. Do not become buried in all the analysis because that could delay you from doing what you need to do to get started. You will continue to learn along the way, but you’ve simply got to plunge in and make your first investment. Have confidence that you can eventually become a real success by investing in real estate. 


Hard Money Loan Rates


At DML Lending the interest rates and terms on most short-term loans, including fix & flip loans, start at 12% but can go down to 10% if the borrower has a track record of experience. The number of successful fix & flips completed in the 24 months period.

You can also seek hard money loans for Cash-out, Construction, Multifamily Dwellings, New Construction and Transactional Funding on investment properties.

Our loan programs are available throughout the entire U.S.


Hard Money Lenders


Real estate investors can turn to hard money lenders to provide them with the financing needed to buy, repair and renovate investment properties. When selecting a hard money lender, it is important to choose one with a pre-set fee schedule, not someone who is vague or cannot be pinned down when you ask for specifics regarding their rates and terms.

Be wary of lenders who use the value of the property or your credit score in determining what they claim is “the best rate” for your type of project because they are most likely not offering you the best rate. You also need to be concerned about any “junk fees” they may be adding on as well as hidden costs. These fees are routinely called application fees, document preparation fees and/or processing fees. Be careful because these fees are totally unnecessary and can really cut into your profits, to the tune of thousands.

Make sure to ask whether your hard money lender provides financing for the purchase as well as the repairs and renovations on the investment property or if they’re only offering to finance the purchase price. It’s very important to find a hard money lender who is open and candid about their rates and terms, who has no hidden costs to worry about or junk fees that are totally unnecessary. You want someone who will finance both the purchase and the rehab and has the capital necessary to help you become a true success investing in property.


Are you ready to grow with us?


At DML lending we take tremendous pride in being one of the nation’s leading hard money lenders. We are thrilled to be in a position to help individuals investing in real estate since they have such a positive effect on the areas where they invest. We currently operate in 42 states to include New York, New Jersey, Connecticut and hope you contact us for all your real estate financing needs, whether it's a fix & flip homes, multifamily or new construction investment property.


Please contact us at 646-543-9667 with any questions you might have regarding our hard money loan programs. You can also email us at  or submit a contact form through our website. If you want to submit a loan application please click here to complete our two-minute form. It would be our pleasure to work with you hard money loans to finance your real estate investments.


Thank you for your interest!