The mechanical product is the same
Both hard money and private money are short-term, asset-based real estate loans for investors. Both are secured by the property. Both have 6–24 month terms. Both lend up to 75–80% of ARV.
The difference is the capital source and how that affects underwriting, flexibility, and relationship dynamics.
Side-by-side
| Hard Money | Private Money | |
|---|---|---|
| Capital source | Institutional non-QM platforms (Wall Street-backed, fund-backed) | Individual lenders, smaller funds, family offices, trust-deed pools |
| Underwriting | Templated; rate sheets; standardized criteria | Relationship-driven; deal-by-deal |
| Rates | 9.5%–12.5% | 9.5%–13.0% |
| Points | 1–3 | 1.5–4 |
| Max LTV | Up to 80% of ARV | Typically 65%–75% (more conservative) |
| Typical close | 7–14 days | 3–10 days (established relationship); longer first-time |
| Property type flexibility | Standard product menu | Broader; includes atypical and distressed |
| Borrower flexibility | Templated criteria — newer borrowers welcome on standard deals | Track record matters; relationship investment required |
| Capacity / scalability | Essentially unlimited at platform level | Finite per operator |
| Prepayment | Often inflexible | Often negotiable |
| Cross-collateral / portfolio loans | Limited | Often accepted |
| Example operators in Chicago | Kiavi, Lima One, Renovo, Easy Street, RCN Capital | Chicago Private Capital, Midwest Bridge, Trust Deed Capital, Great Lakes Private |
When to choose hard money
- Standard fix-and-flip or BRRRR project that fits the institutional product menu
- First-time investor without established private money relationships
- Scale operator doing 5+ deals per year needing reliable capacity
- Deal that fits clean rate-sheet criteria — you want fast, templated processing
- You need DSCR refi paired with the acquisition loan — most institutional lenders offer both
When to choose private money
- Unconventional property type, condition, or title situation
- Same-week close required (auction, tax-deed, pre-foreclosure)
- Established relationship with a trusted Chicago private lender
- Cross-collateral or pool security needed across multiple properties
- Deal-specific flexibility needed (term length, prepayment, draw structure)
- Borrower profile that doesn't fit institutional templates (credit issues, foreign nationals on some deals)
The serious operator's playbook
Most successful Chicago investors use both. Institutional hard money is the workhorse — predictable, scalable, available. Private money is the specialty tool — used for fast-close acquisitions, atypical deals, and projects requiring negotiated terms. Build both relationship types over time.
Frequently Asked Questions
It depends on the deal and the relationship. Established private money operators often price below institutional hard money for trusted borrowers. New borrowers typically get better pricing from institutional hard money because the platforms compete for volume.
Established private money relationships can close in 3–7 days. Institutional hard money typically runs 7–14 days. For first-time borrowers, hard money is usually faster because the platforms have streamlined underwriting; first-time private money relationships require qualification first.
Private money. Institutional hard money platforms have product menus — if your deal doesn't fit (atypical property type, major distress, complex title), you may be declined. Private money operators underwrite deal-by-deal and accept broader property types.
Institutional hard money. Capacity is essentially unlimited at the platform level. Private money capacity is finite per operator. Investors doing 10+ deals per year typically use institutional hard money as the volume vehicle and private money for the specialty deals.