Hard money loan
A short-term loan from a private lender based mainly on the property's value rather than the borrower's income. It closes fast but carries high rates and fees, and is common with flips and other investment deals.
Also called: hard money, private money loan, fix and flip loan
Related terms
Buying a property, renovating it and reselling it quickly for a profit. Profit depends on the purchase price, repair costs, holding costs and the after-repair value.
The estimated market value of a property once planned repairs are done. Flippers and hard money lenders use it to set offer prices and loan amounts.
A short-term loan that uses the equity in your current home to buy the next one before the first sells. It costs more than a regular mortgage and is repaid when the old home sells.
A strategy of buying a property below value, rehabbing it, renting it, then doing a cash-out refinance to pull money back out and repeat. It depends on accurate repair costs and appraised value.
An investment property loan qualified on the rental income the property produces rather than the borrower's personal income. Lenders look at whether rent covers the payment by a set ratio.