Mortgage Blog

Getting you the mortgage you deserve

Multi-Family Lending: What You Need To Know About Hard Money Loans

March 8, 2021 | Posted by: Justin Emilio

Multi-Family Lending: What You Need To Know About Hard Money Loans

Multi-family real estate is one of the most popular investments for both newbie and seasoned investors. Buyers in the past used traditional financing. And until recently, multi-family loans are the best alternative financing for investors; however, this was not always the case.

Not too long ago, the hard money lending industry was riddled with shady mortgage brokers who provided risky loans to unsuspecting clients with the aim of foreclosure on the property.

Luckily, such realtors don't exist in today's market. And although lingering stigma remains in some investors who have not yet used the services of a trustworthy hard money lender, understanding the basics of hard money lending is the first step in securing a reliable hard money loan.

In this article, we will go over the basics of hard money loans. This includes topics such as:

  • What is hard money?

  • How hard money works

  • Why use hard money

  • When does hard money make sense?

  • And some of the drawbacks experienced with hard money loans

How Hard Money Loans Work

Hard money loans are short-term lending instruments granted to real estate investors to finance their investment projects. Unlike traditional bank loans, the ability to acquire a hard money loan depends mostly on the value of the property and not the creditworthiness of the loan applicant.

Most hard money loans come with term lengths of less than a year; however, there are longer loans of up to 5 years. Since each hard money loan is different, your exact terms depend on the deal you strike with your hard money loan lender.

Everything from interest rates, closing fees, or costs in the terms of points should be discussed before acquiring any loan.

What Is Hard Money?

Hard money is a type of loan financing that uses the real property as collateral. In most cases, hard money loans are granted as short-term bridge loans or as the last option. These types of loans are generally used in the real estate industry, with the lenders being private individuals or companies and not the conventional banks.

Why Use Hard Money?

Advantages of hard money financing include:

  • Flexibility: A hard money lender might be more willing to finance your fix-and-flip strategy compared to banks

  • Fast Approval: Private investors compared to banks can make financing decisions faster since they are focused on the collateral rather than the applicant's creditworthiness.

  • Negotiable: Hard money loans are negotiable unlike conventional bank loans. You might even be able to tailor your repayment schedule or get origination fees reduced during underwriting.

  • Bad Credit Doesn't Disqualify: As long as you have a good plan, equity, and a way to prove your real estate experience you can secure a hard money loan.

When Does Hard Money Make Sense?

Although hard money loans are appealing, they may not be perfect for all types of mortgage deals. When an investor is purchasing a primary residence with a good income history, perfect credit, with no issues like foreclosure or short sale, normal financing through a bank might be the best course of action.

Hard money is the best source for financing when other financing options are impossible, or when the loan is needed urgently.

Hard money loans are ideal for:

  • Fix and Flips

  • Investors with credit score issues

  • Investors with time constraints

At times, it may be a better idea to get pre-approval with the assistance of a Mortgage Professional for upcoming real estate investments.

Hard Money Drawbacks

Hard money loans are not always the best financing option. Here are two main disadvantages you should consider.

  • Cost: Hard money loans also come with added costs such as origination fees, closing costs, and even loan-servicing fees.

  • Short Repayment Period: Hard money loans are intended to get a property ready for resale as fast as possible. For this reason, these loans come with shorter repayment periods compared to traditional loans.

Get The Right Financing For Your Real Estate Investment

Hard money financing for Real Estate has become commonplace in the Multi-family Housing sector. If for nothing else, hard money loans give Multi-family investors an edge over those still using traditional financing methods.

The good news is that the market for both short-term and long-term Multi-family financing is large, and investors are spoilt for options. It would be wise to make sure you understand all the terms and fees before signing any papers.

For more information on Hard Money Lending and other investment or financing topics, contact us. Talk soon!

Back to Main Blog Page


5 Things NOT to do When Selling Your Home

Bank of Canada Rate Update March 8, 2023

The Bank of Canada Holds Rates Steady Even As the Fed Promises to Push Higher

Selling Your Home in the Winter: How You Can Make the Most of It

What is a HELOC?

When's The Best Time To Review Your Mortgage?

Title insurance and home insurance–protect what matters most

How To Keep Your Credit Score Sparkling?

It’s Too Late for a 5-year Fixed

Grow your wealth in real estate with the BRRRR strategy.

Bank of Canada increases policy interest rate by 25 basis points, continues quantitative tightening

Bank of Canada raises policy rate by 25 bps to 4.5%

Before you lock in your variable rate

Budgeting for the Year Ahead

Alternative Lending


Should You Spend the Full Mortgage Amount You're Approved For?

The Pros and Cons of Fixed vs. Variable Mortgages

Bank of Canada increases policy interest rate by 50 basis points, continues quantitative tightening

The Bank of Canada Hiked Rates The Full 50 bps

Bank of Canada increases policy interest rate by 50 basis points, continues quantitative tightening

Enjoying a Debt-Free Holiday

How Not to be House Poor

Job Loss and Your Mortgage Application

10 Things to Know About the Offer Process

A Six-Step, Back to Basics Financial Plan for Most Every Canadian

Canada's Inflation at 6.9% in October Supports a December Rate Hike

10 Important Questions to Ask Your Contractor

First-Time Homebuyer Tips

Bank of Canada Slows Pace of Rate Hikes

Bank of Canada Rate Update October 26, 2022

Best Ways to Plan for Your Down Payment

Bank of Canada Will Not Be Happy With This Inflation Report

Common Mistakes That House Flippers Make & How to Avoid Them

Credit Clean-Up!

Understanding Mortgage Trigger Points

Canadian Inflation Slows For the Second Consecutive Month

How Mortgage Rates Affect Buying Power?

Bank Of Canada Rate Update September 7, 2022

September 7th BoC Rate Hike

Adapting Your Finances

5 Reno’s With the Best ROI

Should You Pay Off Your Mortgage Early?

Gasoline Prices Dipped, But No Time To Celebrate

How Many Homes Should You View Before Buying?

Looking to buy your first home in BC? Here are programs that can help you with that goal

Breaking Your Mortgage Without Breaking The Bank - How Mortgage Penalties Are Calculated

5 Things to Consider When Building Your Own Home

Canadian Inflation Surged to 8.1% in June

Bank Of Canada Rate Update July 13, 2022

Tips for Buying Rental Investment Properties

Inflation, Interest Rates & Locking In

New to Canada?

5 Negotiation Secrets Smart Buyers Use to Get Better Deals

Bank Of Canada Rate Update June 1, 2022

Another Jumbo Rate Hike, Signalling More To Come

Dreaming of a Home Away From Home?

Reverse Mortgages and What to Know

How a Mortgage Pre-Approval Can Protect You from Rising Rates

Purchase + Improvements Mortgages

How is a Private Mortgage Different Than a Traditional Bank Mortgage

Have You Had Your Mortgage Check-Up?

Purchase Plus Home Improvements?

Home-Buying 101: A Guide to Purchasing Your First Home

Bank Of Canada Rate Update April 13, 2022

From tax breaks to homebuyer incentives, how the 2022 federal budget affects Canadians’ wallets

5 Benefits of an Investment Property

Preparing for the Spring Market

Refinancing: What You Should Know

Tips for Picking the Right Home to Flip

Bank of Canada Starts Hiking Rates, Signalling More To Come

The Difference Between Bank of Canada Rate and Prime Rate

Bank Of Canada Rate Update March 2, 2022

Can Housing Upgrades Affect Your Insurance?

What to Look for During a Home Tour??

Understanding Insurance

Rent to Own Homes vs. Mortgage: How Do They Work?

Improving Your Financial Direction

Bank Of Canada Rate Update January 26, 2022

Top 10 Questions to Ask Your Mortgage Broker in BC

How Much of A Mortgage Can You Afford?

Housing Market Predictions


Prequalification and Pre-Approval—What is the Difference? Home Buying in BC

Bank Of Canada Rate Update December 9, 2021

Selling Your Home in Winter

Mortgages for the Self-Employed

What to do if You Are Denied a Mortgage

How to Know if it's Time to Refinance

7 Steps for Mortgage Prep

Up for Renewal??

Bank Of Canada Rate Update Oct 27, 2021

Five Great Benefits of Owning an Investment Property

What Is Home Equity and How Can I Build It?

Why Invest in a Home Inspection

Low Credit is Spooky! Get Better Credit With The 5 C’s

Fall Home Tips

How to Handle a Low-Ball Offer in Real Estate | Home Selling Advice

5 Approval Roadblocks You Should Know

How to Talk to Your Kids about Finances

Bank Of Canada Rate Update Sept 8, 2021

What are credit scores and how are they important?

Getting a Mortgage as a Student

What Happens if You Lose Your Job Before Closing?

How a Funding Condition Can Secure Purchasers From Financial and Legal Penalties in BC

Bank Of Canada Rate Update July 14, 2021

Risks of Putting Down a Firm Offer with a Pre-Approval BC

Low Rates in BC Helping Buyers Pay Off Their Mortgages at Record Pace

Buying Land To Build A Home in BC

Bank Of Canada Rate Update June 9, 2021

Your House-Closing Timeline: A Step-By-Step Guide | BC

What Are the Next Steps After Your Offer Was Rejected? In BC

Investing In An Apartment Complex

2021 Mortgage Stress Test - Latest Updates

Things To Look Out For When Viewing A Property

April 21-2021 - Bank of Canada will hold current level of policy rate until inflation objective is sustainably achieved, adjusts quantitative easing program

Stress Test 2021

April 2021-Bank of Canada Releases Results from Consultations on Inflation and Monetary Policy

Buying A Home As A Senior Citizen | BC

Top 10 Considerations When Moving to a New Area

Multi-Family Lending: What You Need To Know About Hard Money Loans

Why Borrowers May Choose a Private Mortgage

How to Handle a Mortgage After a Separation or Divorce

How Good vs Bad Debt Impacts Your Household

Benefits of Investing in Multi-Family Real Estate


Top 3 Biggest Home Seller Mistakes

3 Tips on How to Better Your Credit Score

Renting VS Buying a Home

Five Tips for Buying a Condo

Cons of For Sale By Owner (FSBO)

Real Estate 101: Getting Your Home Ready To Show

Tips for Real Estate Investors

Reverse Mortgages – Impact on Heirs

Advice for First-Time Home Sellers

Top 3 Home Improvement Ideas to Increase the Value of Your Home

5 Things NOT To Do When Selling Your House

Home Inspections, How They Can Benefit Home Buyers and Sellers

Useful Tips for Buying and Selling A Home During Covid-19

When Is Mortgage Refinancing a Bad Idea?

Is it a Good Time to Become a First-Time Home Buyer?

5 First-Time Homebuyer Mistakes To Avoid

5 Smart Ways to Use a Home Equity Line of Credit

What should you consider when refinancing your mortgage?

6 Signs a Home Will Likely Increase In Value

6 Persistent Real Estate Myths You Really Need to Ignore

Should You Pay Off Your Mortgage Early?

New Stress Test On Insured Mortgages

Real Estate 101: Essential Tips for First-Time Home Buyers

10 Essential Tips for Taking Out Your First Mortgage

Should You Refinance Your Mortgage?

Should You Spend the Full Mortgage Amount You're Approved For?

Take Advantage of Low Interest Rates – Refinance Your Mortgage Today!


Strategies to Dig Yourself Out of the Debt Hole

Why You Need an Emergency Fund And How to Get One

The Benefits of Investing in Income Producing Properties

4 Hidden Problems That Could Be Hurting Your Home Sale