Conventional lenders, like banks, typically won’t approve loans for investors with recent foreclosures or poor credit—regardless of the circumstances. That’s just how traditional financial institutions operate, and it often means waiting a significant amount of time before becoming eligible for funding again. In contrast, hard money lenders are far more flexible. They often work with investors who have bad credit by focusing on asset-based lending. In California, hard money loans are primarily assessed based on the property’s value and the size of the investor’s down payment, rather than credit history.

That’s a great question. Traditional lenders are often hesitant to work with self-employed borrowers—especially those without at least two years of verifiable work history. They tend to prefer applicants with steady paychecks from large employers. This can be a challenge for full-time real estate investors, who are usually self-employed and don’t receive consistent income in the traditional sense. However, direct hard money lenders are different. They focus less on employment history and more on the value of the property and the investor’s equity in the deal. This makes hard money loans a great option for new or self-employed investors who are just getting started. Once you’ve built two years of experience, you may even be able to refinance into a more conventional loan down the line.

Hard money direct lenders don’t impose limits on the number of loans an investor can have. Instead, they focus on other factors when evaluating a loan request. In contrast, many banks place a cap on the number of loans an investor can hold—typically up to four. This is an arbitrary limit that banks have set, and it can prevent otherwise qualified investors from securing additional funding, even if they are a strong candidate for a loan. With hard money lenders, however, the number of active loans you have won’t be a barrier to securing financing.

It’s no secret that traditional lenders take significantly more time to fund a loan. In fact, it’s common to wait 30 to 45 days—or even longer—before receiving approval from a bank or other conventional lenders. The process often requires a lot of paperwork and documentation, which can be time-consuming and frustrating. This is one of the biggest differences between traditional lenders and hard money lenders. With direct hard money lenders, you can often be approved on the same day you apply, as long as all necessary documents are submitted. For many real estate investors, the speed and simplicity of hard money lending are key reasons why they choose it over traditional bank loans.

When real estate investors explore alternative funding sources for their projects, one option is partnering with a funding partner. While teaming up to finance a property can be a good choice in certain situations, there are several important factors to consider before moving forward. One of the most significant is that partnering often means giving up some control over decision-making. Additionally, many partners will expect to receive a substantial portion—often 50%—of the profits when the property is sold. This can become quite costly. Given these considerations, securing funding from a direct hard money lender may be a more attractive option, allowing you to retain full control and keep 100% of the profits at the end of the project.