Yes hard money lenders are a viable option when one deems that the market is
going to continue to rise more than 10-15% a year or when one wants to buy
and flip a property.
It is being pursued by Investors.
The knowledgeable, able and experienced buyer can use hard money loans to their benefit.
It is when this option is misapplied that real trouble surfaces.
Just like the zero interest loans, in their inception, were for builders in need of short term money, was misapplied for traditional home purchases the wheels on the wagon started to wobble.
One must think really, really hard before choosing an option that can raise your costs by 30%. That is expensive. Proceed with care. Hard money IS a solution for specific and real problems. This would never apply to a home buyer intending to reside in the home who does not have the guarantee of a financial windfall. (are the wheels wobbling?)
Best of success to you,
Annette Lawrence, Broker/Associate
Remax Realtec Group
Palm Harbor, FL
In my opinion hard money has it's place for sophisticated investors who are purchasing Real Estate for investment purposes and can justify the high cost of the Hard Money loan because the real estate purchased will produce a return high enough to justify the cost of the hard money loan.
As Grace Morioka pointed out, hard money is a short term solution for the purchase of Real Estate by sophisticated investors.
I would not recommend hard money for an unsophisticated homeowner or investor.
Several of my clients have done so. Of course, they're experienced and already know the process. So if it's the first time, buyers should definitely seek the advice of a Realtor knowledgeable about hard money lending.