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What is a Hard Money Loan?

Learn more about Hard Money Lending in Texas!

What is hard money?

What is a Hard Money Loan?

A hard money loan is a short-term, real estate-backed loan used to acquire investment properties. Catalyst provides the money to both purchase and repair distressed properties. Hard Money loans, also called private money loans for real estate investments, usually involve far less red tape and documentation requirements.

The best way to ensure you’re making sound moves with your real estate investment strategies is to get educated. At Catalyst Funding, we want to ensure you understand all the facts behind how a hard money loan works.

Who Are the perfect candidates for hard money loans?

Property Investors

Both new and experienced investors! Anyone looking to fix and flip or fix and rent distressed properties with the intent of making a profit, hard money loans can be the perfect fit.

Fix & Flippers

Real Estate Investors looking to purchase distressed properties, repair them, and then sell for a profit. A hard money loan will allow them to quickly purchase the property and perform repairs without spending their own cash. 

Buy & Hold Investors

Hard Money Loans are great for investors who purchase real estate properties with the intention of holding them for an extended periodto generate rental income and benefit from long-term appreciation.

Quick Flippers

Real Estate Investors who purchase properties with the intent of renovating and improving them quickly, then selling for a profit, usually within a few months. 

Why Use a Hard Money Loan?

  • Speed

    Quickly acquire a distressed property. Hard Money can close in 7-10 days. Properties in need of repair do no qualify for traditional financing. If no repairs are needed, distressed situations usually must close quickly because this distress is usually related to timing. For example, a seller may be facing foreclosure.

  • Leverage

    Leverage is used by almost all successful real estate investors. The goal is to have the return on the investment greatly exceed the cost of borrowing. While there are costs associated with leverage, leverage facilitates doing more or larger deals, greatly increasing return on investment. If purchased at the right price, you could acquire 100% financing with a hard money loan rather than paying entire purchase price and repairs in cash.

  • Off Market Deals

    Off-market properties will usually provide the greatest returns for real estate investors. These are usually provided by wholesalers and, in some instances, real estate agents. In return for offering a discounted price, sellers demand fast closings, little to no contingencies and cash offers or hard money loan financing. The property condition itself will usually not qualify for traditional financing. In the rare instance the physical condition of the property qualifies, the seller will rarely accept traditional financing such as conventional or FHA loans because they are not willing to wait 30-60 days to close.

  • Better Terms on Long-Term Loans

    Qualify for lower interest rates on long term loans by avoiding cash out refinances. Additionally, conventional and many DSCR products will require ownership for the property for an extended time, such as 6 months, to be able to acquire a cash out loan.

  • Great Way to Add Rentals

    The hard money to permanent refinance process is an outstanding way to add rentals. This process allows investors to buy off market deals, using leverage, minimizing out of pocket expenses and increasing return on investment. Working with companies such as Catalyst which provide an integrated process with a single point of contact makes the process smooth and easy.

Advantages of a Hard Money Loan

  • Receive loan funds quickly, usually within days.
  • Qualifying is significantly easier for a hard money loan than for traditional lending.
  • Leverage your cash with a hard money loan for more investment opportunities.
  • Ensure you have cash available for that perfect home run deal with a hard money loan.
  • Hard money loans are ideal for properties in disrepair, making them perfect for property flips, renovations, rehabs, rentals, and quick investments.
  • Benefit from hard money loans with no pre-payment penalties.
  • Many wholesalers and distressed sellers view hard money loans on par with a cash offer.
  • We don’t make mistakes many private lenders make including:
    • Running out of money to lend before closing or worse – during the draw period.
    • Miss critical title, appraisal or zoning issues.
  • Guidance on complex title issues, rehab or valuation questions.

How do I purchase real estate with a Hard Money Loan?

Just follow the steps!

Step One

Get Pre-Approved

Get pre-approved for a hard money loan. Do this before you start looking for properties. Good deals sell fast. It is too late to try and get pre-approved when you find a deal.

Step Two

Find A Property

Begin searching both on market and start making connections with off market wholesalers to locate and secure a distressed property with your hard money loan pre-approval. Click here for relevant blog with tips to help!

Step Three

Secure The Property

Submit a contract on the property with applicable pre-approval letter. Hard Money loans can close within 7 days, so make sure you have everything prepared ahead of time to perform the scope of work walkthrough and submit other necessary items prior to closing.

Step Four

Renovate & Rehab

Renovate the property as needed. Ensure you are sticking with your scope of work to assure the properties after repair value. Keep in mind, hard money loans are intended to be short-term. So, make sure you complete this step quickly so you can maximize your returns by paying holding costs for the shortest possible time.

Step Five

Sell or Refinance & Lease - PROFIT!

If your intention is to flip the property, then get it on the market, sell it, pay back the loan and make the profit! If you intend to keep the property as an investment, quickly refinance and lease to reduce your holding costs and start making income.

Whether you want financing for a quick sale or major renovations, hard money loans are typically the easiest and fastest way to secure financing as a real estate investor! 

Why Use Hard Money Over Conventional Lending?


Hard money lenders are more interested in the quality of the investment and getting the  minimum documents to ensure you are a quality applicant. Therefore, they ask for far fewer documents and the process is much faster and easier. Once you have a relationship with a lender, the process can move very quickly and smoothly, giving you an edge on closing deals fast.    



Hard money loans are usually more flexible than traditional loans. Lenders evaluate each situation individually based on the investment opportunity. Traditional loan processes are rigid and time consuming. Hard money is faster and based on a deal making sense overall. At Catalyst Funding, most loan decisions are made in house and that autonomy is a big reason we average 5 stars on all social media platforms. 

Fast Profit

 Hard money loans are designed to be short-term loans. They get you cash fast, so you can quickly jump on an investment opportunity and make a profit. Even with a higher interest rate than a traditional loan, a hard money loan can help produce a higher profit because you are able to buy those attractive, distressed deals.


Most properties in poor condition will not qualify for conventional financing, and oftentimes, the best opportunities come from the ugliest houses. Also, property wholesalers will only sell to those with either a cash offer or an approved hard money loan from a reputable lender.

Tip: At Catalyst, our hard money loans have no prepayment penalty, so if you pay the loan off in a month, you only pay one month of interest.

What are your rates and terms?

Catalyst Funding offers some of the most competitive rates and terms on short and long term loans. That said, we believe in providing value over worrying about being the cheapest lender. We have a top notch team with great experience that will help you avoid mistakes and make more money, even if someone else might be a little cheaper.

For investors who are new to real estate financing, Catalyst Funding offers one-on-one consultations to discuss your goals and expectations for new projects. 

When it’s time for your loan to close, here is what we need: