People typically fear hard money lenders. It's easy to see why: the thought offers up shady business deals carried out in darkened alleyways, with cash exchanged in leather-bound briefcases.
Luckily the reality is neither so notorious nor hard to get into as engaging in crime. These lenders are just like any other, except that they deal in hard cash. In other words, they still often deal in paper money, though many will send money electronically as well.
These are typically private individuals willing to lend cash out on expensive deals, usually real estate, for high interest rates. They stand in contrast to the soft money lender, who offers very flexible payment terms and can extend the repayment time to a long ways away. Hard money lenders will set a rigid schedule and you have to abide by it if you don't want to get hit with crippling interest rates. Their terms are usually not open to negotiation once they've been set.
Though lenders vary on their terms, typically they'll grant you up to three-quarters the total cost of the real estate and allow you to repay the amount over several months to a period of years. They'll typically charge you anywhere from 2 to 10 points on the money loan, as well, so be prepared for some hefty interest.
All that said, there are a few advantages to hard money lenders. First, they're willing to give you money very quickly and up front, to make sure your transaction goes through. And, since they're not institutions but private investors, you'll avoid much of the bureaucratic red tape going through one. Plus, since they do have a face and can easily be communicated with, you can meet, build trust, and maybe get easier deals with these lenders. Always bear in mind, however, that their terms are hard to meet if you're not sufficiently prepared. As long as you are, though, you can turn a real estate situation to your advantage and get the cash you need with a minimum of difficulty. Not too hard, eh?