What is Hard Money?

by | Jan 7, 2026 | Blog, Hard Money Lender, Loans, Property Flip, Real Estate

Texas Real Estate Investing

What Is Hard Money and Why Texas Real Estate Investors Use It

Hard money lending is one of the most misunderstood tools in real estate investing.
In reality, it is often the fastest and most practical way for Texas investors to fund deals.

Below is a simple breakdown of how hard money works, why it is different from banks,
and how investors across Texas use it to move faster and make smarter decisions.

What Is a Hard Money Loan?

A hard money loan is a short term, asset based loan used to purchase or refinance investment property.
Instead of focusing on personal income or tax returns first, hard money looks at the property and the deal.

Hard money lenders typically focus on:

  • The property itself
  • The deal numbers
  • The exit strategy

This is why hard money is commonly used for fix and flips, rental purchases, and value add properties where timing matters.

Hard Money vs Banks

Banks are built for homeowners. Hard money is built for investors. Here is the difference in real life.

 

Traditional Banks

  • Long approval timelines
  • Heavy documentation
  • Strict income requirements
  • Appraisals can slow everything down
  • Limited rehab funding
  • Less flexible underwriting

Hard Money Lending

  • Faster approvals and closings
  • Cleaner process for investors
  • Deal based underwriting
  • Rehab funds can be included
  • Structured around your exit strategy
  • Made for repeat investing
Simple way to think about it:
banks ask “do you qualify?” hard money asks “does this deal work?”

Hard Money Lending Across Texas

Texas is one of the most active real estate markets in the country. Investors use hard money to compete
in fast moving situations across the entire state.

Dallas
Houston
San Antonio
Austin
Smaller Texas cities

Whether you are buying your first investment property or scaling a portfolio, hard money helps you move at the speed of opportunity.

Get Real Numbers Before You Buy

One of the biggest mistakes new investors make is guessing. Smart investing starts with real numbers, not assumptions.

Deal analysis usually includes:

  • Purchase price
  • Rehab costs
  • After repair value
  • Holding costs
  • Projected profit or cash flow

When you run real numbers, you make smarter decisions and avoid expensive surprises. That is why deal analysis matters.

Why New Investors Often Start With Hard Money

Hard money is not only for experienced investors. Many first time investors use it because it helps them learn the process
while moving faster than a bank.

  • Easier path to approval than traditional lending
  • Clear structure based on the deal, not paperwork
  • Speed and certainty when sellers want quick closing
  • A disciplined focus on numbers and exit strategy

Ready to Talk About Your Goals?

If you are looking at a deal anywhere in Texas, we can help you get clarity fast.
Talk with us about your goals, your experience level, and the numbers behind the deal.

No pressure. Just real feedback and real options built for investors.

Book A Call

90% Hard Money Loans and Percentage Confusion

by | Jul 18, 2018 | Loans

Recently, there has been a change in how some lenders are marketing LTVs (Loan to Values): Borrow up to 90% of the purchase price and up to 100% of the rehab cost. At first glance, you might think you are getting a higher loan amount, and in turn, bring less money to closing when you purchase. But you have to read the fine print. They often will loan EITHER 90% of purchase price plus rehab OR 70% of ARV, whichever is LESS. The reality is, you are bringing a minimum of 10% down no matter what your deal looks like.

Unfortunately, this has confused both new and experienced borrowers, and it’s time to clear up this confusion. First, when you see “90%,” be sure you pay attention to the next four words, which say “of the purchase price.” This means you are getting a loan based on 90% of the cost of the property, AFTER calculating the maximum loan amount at 70% of the ARV. Confused yet? I promise you’re not alone.

Let’s look at some examples to help you understand. If you are buying a house for $100,000 that has an ARV of $150,000, with $5,000 in rehab, your loan amount is going to be $94,500, instead of $105,000. The formula is the maximum loan amount ($105,000 in this example) or 90% of cost plus rehab ($90,000 + $5,000), whichever is less.

Let’s say you are purchasing this same house for $120,000. Based on the advertising, you would think that you were getting a loan amount of $108,000 (90% X $120,000). But, because the maximum loan amount is $105,000 (70% X $150,000), your actual note would be for the same amount, $105,000.

To add to the confusion, the advertising states receiving 100% of the rehab cost. This is true for almost every hard money loan. Lenders want to fund 100% of the rehab cost to make sure that all of the work is getting completed. Therefore, the total rehab cost is built in to every loan. If you are working with a lender that is not loaning 100% of the rehab costs, it is an anomaly, and you may need to find another lender.

What should you expect when looking for a loan? Most lenders will loan up to 70% of the ARV for a flip, and up to 75% for a rental property, regardless of the purchase price. If you buy a deal below the LTV threshold, many lenders will give you 100% financing. Of course, it’s based on your financial profile and the amount you can be approved for, without overextending yourself. And, of course, 100% of the rehab should be included in the loan. Most importantly, read the fine print and do the math to see how any offer will actually work out in the end.