Combining Hard Money with Other Funding Sources

hard money loans


A common misconception in our industry is that hard money is a separate entity unto itself. People look
at it as an all-or-nothing kind of thing. Truth be told, hard money is just another funding option – albeit
superior to other options. We say all this to explain that many of our clients combine hard money loans
with other funding sources.
The beauty of hard money is its flexibility. We can work with clients to fund projects in ways and other
types of lenders cannot. We take pride in being able to find funding solutions for even the most unique
needs. We look at every angle. We turn over every rock. We look behind each and every door.


Putting Skin in the Game
Actium Partners is no different from any other lender in our industry in that we require our clients to
have some skin in the game. If you come looking for a loan and are not willing to put anything in, the
chances of being approved are slim. But before you shake your head in dismay, there is more than one
way to put skin in the game.
Some hard money lenders with a special emphasis on the real estate market are willing to look at deals
involving both hard money and seller carry financing. In such cases, the seller carry financing is as good
as cash. A real estate investor new to the industry could combine hard money with seller carry to
acquire a new property with very little cash up front.
Of course, the seller would have to take second position behind the hard money lender’s first position.
But if seller and buyer are willing to do a deal under those conditions, some hard money lenders can
make it work. This is not to say that Actium Partners looks for these types of projects, or even funds
them. It is merely to say that seller carry financing is one way to combine hard money with other
funding sources.


A Bridge to Traditional Funding
Another way our clients combine hard money with other funding sources is through bridge funding on
their way to traditional borrowing. A good example would be an investor looking to close a deal without
having to wait on the bank. In such a case, a bridge loan from Actium can meet their needs.
Our loan gets the deal done. With a one-year term to work with, the client has plenty of time to arrange
traditional financing through a long-term bank partner. They obtain a bank loan, pays off our loan, and
goes about their business. They have combined two types of funding to complete their project.


Hard Money in Private Funding
Still other clients we have worked with combine hard money loans with private funding. Oftentimes, the
need for private funding is the result of a low loan-to-value (LTV) ratio. The hard money lender is only
willing to go 50-65%. Meanwhile, the investor only has 20% to put in. Private funding makes up the
difference. Private funding can be in the form of loans made by family members and friends. A business associate
might put up some funds to help get the deal done. The form doesn’t matter as much as the substance.
What matters in the end is that the client comes up with the necessary funding to make hard money
work.
Hard money is not a standalone entity. It is not an all-or-nothing option. It’s quite common for
borrowers to combine hard money with other funding sources to reach their goals. We are just happy to
be a part of it