Actually, Don is correct: traditional hard money lenders (aka "true" hard money lenders [who lend solely based upon the value of the underlying hard asset]) lend almost exclusively on non-owner occupied properties, and most of them insist on lending to entities. Plus, a traditional HML would rarely lend more than 65% to 70% LTV in this market, and I know of plenty who'd only lend at 50% to 60% LTV.
However, I also know of a few--mostly non-traditional hard money lenders (typically mortgage companies and traditional lenders) who offer products, that they call "hard money", but their loan underwriting guidelines typically resemble conventional loan underwriting guidelines (asking for various docs, credit, etc) than they do traditional hard money underwriting guidelines.
True hard money lenders also operate outside of the traditional lending guidelines, because they're technically not banks. This is just as true in CA (I know because I also invest in OC) as it is in VA (another place where I invest), or anywhere else where I invest. A key reason why a traditional hard money lender typically won't lend on an owner occupied property and usually insists upon lending to entities is to avoid various usury laws that would cap the amount that they could charge for interest/points. Another key reason they typically won't lend on an owner occupied property is to avoid the complications of foreclosing on a defaulted borrower's residence. A third reason why they typically won't lend on an owner occupied property is that their focus is more B2B.
Yet, I've seen some traditional HMLs lend on luxury homes in certain areas of CA even for owner-occupied properties. So exceptions do happen from time to time.
I keep hearing about HMLs lending at 10% rates, and I keep seeing deals close minimally with at least 12% rates--both on residential and commercial deals. Nevertheless, I'm still shopping for them, and I'd love to get a some referrals for HMLs who lend at 10% on various deals. If they're CA-only lenders, then I'll only use them on CA deals.
Also, most investors I know won't compete against other buyers, because most of them are too busy buying pocket listings before they even hit the MLS, or they're buying junkers/unwanted-listings.
A.., I've found that most sellers with "CASH ONLY" requirements are selling properties that wouldn't qualify for conventional financing (just as Bill wrote and Don confirmed), or those sellers haven't sat with their properties on the market long enough to "tenderize" their line of thinking. If you're concerned about competing against "cash buyers" (typically investors), then why not learn to work with them instead?