Author: Todd

What is a hard money loan?

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A “Hard Money Loan” is primarily based on the value of real estate, which serves as collateral for the loan. In contrast, banks typically consider factors such as real estate value, borrower income, and credit history when evaluating loan applications.

Compared to the typical bank loan process, the process of obtaining a hard money loan is often easier and faster, typically taking only days or weeks instead of months. This is primarily because hard money lenders are generally not concerned with factors like income and other related documentation and verification.

Hard money lenders typically offer loans up to 70% or 75% of the real estate value (sometimes less, depending on the lender, the property type, location, or other conditions). Interest rates or Annual Percentage Rates (APRs) with hard money lenders are usually higher than those offered by banks, although there are exceptions when hard money rates are lower than those of banks.

People opt for hard money loans in the following situations:

  1. When a bank’s funding process is too slow, and the deal or opportunity requires quick financing.
  2. When a bank refuses to provide a loan due to issues related to income or credit.

Hard money loans are typically short-term, ranging from a few months to a few years. They are often provided by private lenders, individuals, or non-bank entities.

Repayment of hard money loans is often independent of income and credit issues. Borrowers frequently pay off these loans when they sell the real estate property. Alternatively, borrowers may also repay the hard money loan when they secure a long-term loan from a bank. These loans that bridge the gap until a long-term bank loan is obtained are commonly referred to as “bridge loans”.

Local Direct Hard Money Benefits

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Save money and time, and avoid scams and last-minute term changes using a direct local hard money lender


What is hard money and what is a local direct hard money lender.

Hard money loans are underwritten primarily based on real estate (i.e., the hard asset) value. In contrast, banks often focus on additional factors such as borrowers’ income and credit. Therefore, the hard money loan process is often much easier and faster than navigating a bank’s loan process. Days or weeks instead of months. This is because hard money lenders are typically not concerned with factors like income and all the related documentation and verification. People use hard money loans when: (1) a bank is too slow for the quick funding required by the deal or situation or (2) a bank will not loan funds because of an income or credit issue.

A hard money lender provides hard money loans.

A local direct hard money lender means that:

  • the money is coming directly from a single source controlled by the individual(s) underwriting the loan, not from a fund, multiple people, set limited partners, a publicly owned company, other situations where more than one person is providing the money, and not a loan arranged through a mortgage broker; and
  • the hard money loan is underwritten by an individual residing relatively close to the collateral property.

There are hard money funds that are local, but their obligations,  and motivations are often different. A  local direct hard money lender can be flexible and practical. For example, funds may have contractual obligations to obtain an appraisal for every property. A direct hard money lender may not require appraisals.

There are brokers who work with multiple hard money lenders (including direct lenders and fund lenders with multiple investors). Such brokers might choose the lenders who pay them the most rather than the borrower the best terms. Also, brokers may not have local knowledge and could have much less incentive to ensure the borrowers or lenders don’t lose money in the end.

Save Money…

Skip the appraisal – Local direct hard money lenders often loan without appraisals. Many local hard money lenders do not require appraisals for one-to-four-unit residential properties. This can save you money and time. In contrast, hard money funds cannot skip the appraisal; they are contractually obligated to obtain one. That can delay closings and cost the borrowers hundreds of dollars.

Avoid upfront fees – Many local hard money lenders do not charge upfront fees (i.e., fees paid to the lender/broker before the loan origination). Often, these upfront fees are non-refundable. Some lenders will charge small application fees (less than $100) that cover costs like credit and background checks.

Avoiding losses on the back end – A mortgage broker or fund manager, will often make money just by getting the loan originated. That person may not take on any risk if the property is worth less than expected. That risk may fall solely on the borrowers, the fund investors, or the party providing the loan funds. A person may be much more concerned with risk of losses for the borrowers and lender, if that person is directly providing the money. Sometimes, the local knowledge can help you better estimate the current and future value of the property. Appraisers will sometimes not base their figures on comparable properties (which can occur for legitimate reasons, like no recent nearby sales being available). Local knowledge can involve knowing that a location is downwind of a brewery or factory, differences in schools, local government policy changes, or other local dynamics that can impact value. There is no guarantee that a local hard money lender will have important local knowledge, but there’s a better chance they will.

Avoid Scams…

Advanced Fee Scams – Beware of lenders requiring large upfront fees before the loan origination. Also beware of “release fees” or any charges to have the loan funds released. These types of schemes are commonly known as advanced fee scams. Borrowers should not need to pay advanced fees to a “lender.” Fees paid to third parties (e.g., inspectors, surveyors, structural engineers, etc.) may be legitimate; however, it’s important to first verify that those vendors are legitimate businesses. You can avoid some fake lender scams by verifying and directly paying vendors prior to the loan origination.

Other scams – Avoid additional scams by: (1) meeting with a loan decision-maker in person; (2) verifying that the person and company are real; and (3) verifying that your contact is the actual person they claim to be. Because scammers are often remote and don’t want to be identified they may be unwilling to meet in person. Verify the company by checking the company’s state registration. The Secretary of State usually maintains a database of company registrations, including addresses. Verify in multiple ways that the person you are taking to with is who you think they are: (1) call the phone number on the company website to reach that person; (2) the website might be a front, so verify by going to the Better Business Bureau ( and checking for the rating and history for the metro area the property is in, as well as calling the phone number listed with the BBB to reach your contact; and (3) check public records for mortgages/deeds of trust and verify details such as the company’s address.

You can learn more about related scams here.

Avoid surprise fees and last-minute term changes…

Sometimes, a hard money lender is really just a broker who arranges loans from others. Such a broker can promise low rates and fees to get borrowers. However terms may change shortly before closing (when the borrower has little choice). The broker might claim their original fund source backed out or that some other unexpected situation arose. Local direct hard money lenders are less likely to use deceptive practices like this. Typically, local direct hard money lenders are concerned about their reputation in the community and highly value repeat business. Whether lenders are local or not local, look for honest and ethical people. Generally, involving yourself with people who highly value ethical behavior and care about others is a good practice. If the rates and fees are not clear on the website, ask for a written term sheet. The term sheet should include rates, fees, and conditions to close among other details.

Note: If an application provides materially incorrect information , it is likely and reasonable the terms will change. Example where terms might change or loan offer cancelled: The borrower states the property is in good shape with no issues, there are roof leaks, structural issues, or other issues that could affect the current or future value the property.

Colorado Direct Local Hard Money
Win with local direct hard money

How to avoid impostor lenders (& advance fee scams)

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Lender Impersonation and Advanced Fee Scams

Scammers use fake names and subtle changes to website addresses. Posing as a lender is often part of Advance Fee Scams promising a large loan, in return for an up-front fee (a well-known non-lending version of the Advance-Fee Scam is the “Nigerian Prince” scam).

These thieves can pose as anyone or any company. We are a local private lender and provide loans secured by property in Colorado’s Denver, Boulder, Fort Collins, And Colorado Springs Metro Areas. However, with these types of scams, thieves may pretend to be from small private lenders like us or from the biggest banks.

A Real-Life Story:

  • A prospective borrower contacted me about a $4MM loan offer he received (supposedly from a “lender” whose name was almost identical to ours, except for one space and the letter ‘s’).
  • The website address was almost identical, except for the slight name difference (just that missing “s” in the website address – Real is
  • My company, Good Funds Lending, LLC, had NOT offered the loan.
  • The suspicious offer was even signed by the “CEO” who had a LinkedIn account indicating he had a Harvard education and lots of connections. (As of writing this, I no longer see his profile on LinkedIn; But I have seen an offer now from that same company but with a female CEO who I did not find on Linkedin).
  • The ‘loan offer’ required a $30,000 wire payment prior to releasing the first $3MM in loan funds (“fee to clear”).
  • **My company has NEVER required such a fee. I can’t see why a borrower would ever do that (Even if a lender escrows borrower funds, it would be a different process, but borrowers should be extremely careful and skeptical when being asked for large amounts of money, especially if prior to loan funds being sent from the Lender).


  • I wondered if the other “lender” was legitimate with a similar name in another state. However, the large advance borrower payment to release funds made it clear that legitimacy was unlikely (likely advanced fee scam).  RED FLAG!
  • The “lender” provided documentation indicating the lender’s office was in California. The California Secretary of State did not show the company as registered.  RED FLAG!
  • Instructions were to wire the “fee to clear” to a bank account with another company as the account holder. RED FLAG!
  • That company to receive the fee was registered in another state. RED FLAG!
  • And that company to receive the fee had information on the internet that made it appear very suspect. RED FLAG!
  • I reported the “loan offer” to authorities (more details at the bottom). SMALL EFFORTS CAN IMPROVE FOR THINGS FOR OTHERS!

Why do the scammers do it?? 

Stealing a large fee from the borrower may often be the sole aim. This is the Advanced Fee Scam(see below for more info).

Fake lenders can also use this technique to get information for identity theft, by obtaining personal information from applications, etc.  This is essentially classic Phishing (see below for more info).

How to avoid

  1. Meet with the lender representative in person. In-person meetings mean the scammers (or agents) must be physically present which often they would prefer to avoid or simply can’t do because they are not in the state or the USA.  Additionally, often scammers want to stay far away from personal meetings where his/her picture could be taken. Real private hard money lenders usually (in my experience) want to meet the borrower and see the properties in person to understand the property/project and confirm the borrower is legitimate and likely to succeed.  This also gives you a chance to speak with and get a sense of the character of the lender or their representative.
  2. Be very skeptical and cautious of unsolicited email offers, action demands, or information requests, even when they come from banks or other companies you know or have a relationship with. Often the scam emails will look as those they are legitimate and from a source you know.  Scammers may indicate there is a problem with an invoice, a need for updated payment information, to contact them because someone has used your account or your account has been locked out, or that they are offering free things or you something you want, like a loan.
  3. Check for misspellings or slight changes of lender names and website and email addresses. Is the name singular where it should be plural? Has an extra word like ‘of’ been added? Call the phone number listed on the website of the company.  Independently find the website and don’t just rely on emailed links or phone numbers. 
  4. DON’T make big up-front payments (“up-front” meaning paid before the loan funds are wired from the lender). We currently don’t charge any application fees, nor do we charge any other upfront fees. Any upfront fees totaling more than $200, should be a huge warning sign.  Scammers may charge large application fees or after a loan has been “approved” charge some sort of “release fee” or require a deposit.  Currently, we only charge lender fees if we make the loan, so we are not receiving compensation unless the loan is originated, and we send the loan funds (typically to a title company chosen by the borrower or seller).   Some legitimate private lenders may have a small fee to cover expenses like credit checks and labor related to evaluating the application and loan. We are currently considering charging a small fee ($100) for loans secured by commercial or industrial property since such properties require much more time to evaluate compared to investment residential properties.
  5. Verify the company is registered with the secretary of state where they represent they operate. Does the BBB has the same contact information that you have (including phone domain/website?. This is different than verifying NMLS registration as that has its own issues discussed below. Check that the business is registered with the secretary of state (or other government agency responsible for tracking registrations of businesses in the state).  Often scammers don’t register their fake company because it involves a credit card transaction that can be traced back to an individual. This is not foolproof, as a scammer could pretend to be someone else (but more effective when used together with calling the company at a phone number on the website and verified as listed on the BBB or other trusted agency website).
  6. Check that the Lender makes loans. This is easy. You can ask the title company you have chosen if the lender has made loans or check for public records of mortgages or deeds of trust (pay attention to subtle spelling differences or name changes). In Colorado, you can often check online with a county clerk and recorder. Keep in mind that some lenders and brokers use a different name when recording public documents. The Secretary of State (or other state authority) tracks registered tradenames(aka DBAs or aliases) associated with a registered business.
  7. Check references other than those supplied by the lender. If the buyer or seller chose the title company, you can ask the title company if they have worked with the lender before and if the contact information matches. If you ask the lender, scammers could provide phone or email information to someone they are working with to scam you. If you don’t know anyone personally, you can often find borrowers listed in the recorded deeds of trusts or mortgage documents and contact them. Often an LLC will be the borrower, but the person signing for the borrower will be a member of or, etc. Contacting borrowers has other benefits as well. You can learn how the lender treated the borrowers, etc.
  8. Verify the Lender’s address. If the Lender uses a virtual office, you can verify who holds the virtual office with the virtual office company and check the principal office address listed with the state is connected with the person or company you are speaking with.
  9. Lock/Freeze your credit to lower the risk of someone opening accounts in your name (FTC info on credit freezes This means when you do want to get credit you may need to temporarily unlock your credit.

The above steps don’t provide guarantees and are not comprehensive or exhaustive, but collectively they can substantially lessen risk.

NMLS required?? (No, see why)

Someone recommended check the NMLS registration, but this is problematic for several reasons. First, nothing stops scammers from pretending to be someone else (including his/her name and NMLS #) in an email. Many true private lenders do not have NMLS #, and they are not required to be licensed if they aren’t providing consumer loans. If they have NMLS # there is a good chance that they are a broker or “fund lender with multiple limited partners”, and you may pay more than you would with a true private local private lender.

Report crimes and attempted crimes…

If victims do not say anything, things are unlikely to change. You can make the world a little better and a little safer. Report the scams to the FBI and state authorities (often the attorney general of the state). In the true story above, I reported the scam to the FBI by website after initially calling (FBI Internet Crimes Communication and the California Attorney General. Good Funds Lending, LLC only operates in Colorado. The “loan offer” indicated the other company was in California (per above).

Scam Loan Offers - Advanced Fee Scams and Phishing

“An advance-fee scam is a form of fraud and one of the most common types of confidence tricks. The scam typically involves promising the victim a significant share of a large sum of money, in return for a small up-front payment, which the fraudster claims will be used to obtain the large sum. If a victim makes the payment, the fraudster either invents a series of further fees for the victim or simply disappears… variants have involved mention of a Nigerian prince or another member of a royal family seeking to transfer large sums of money out of the country—thus, these scams are sometimes called “Nigerian Prince emails” [footnotes not shown] ( viewed on April 23, 2021).

Phishing is the fraudulent attempt to obtain sensitive information or data, such as usernames, passwords, credit card numbers, or other sensitive details by impersonating oneself as a trustworthy entity in a digital communication. Typically carried out by email spoofing, instant messaging, and text messaging, phishing often directs users to enter personal information at a fake website which matches the look and feel of the legitimate site.” [footnotes not shown] ( viewed on April 23, 2021).

FTC – How to Recognize and Avoid Phishing Scams

The FBI reported it “received 467,361 complaints in 2019…and recorded more than $3.5 billion in losses…”  related to internet-enabled crimes and scams (FBI website viewed on April 23, 2021)


The information contained above is not comprehensive nor exhaustive and may be flawed. You should verify, research, and check with an expert (at your own expense) prior to acting. I am not an attorney, nor a legal expert and you should not rely on the information provided. The information provided may be incomplete, insufficient, inappropriate, inaccurate, or otherwise unsuitable.

Colorado Bridge Loans

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A bridge loan is a short-term loan prior to longer-term financing, sale, or other financial events.

Bridge loans are also known as short-term loans or interim loans. The “bridge” refers to the short span or gap of time. That span is often between two financial events.

Borrowers may need funds more quickly than a bank loan or another longer-term financing can be arranged. Bridge loans can often originate quickly and provide funds fast, while longer-term financing or other transactions are pending.

Borrowers may repay bridge loans with longer-term financing; However, repayment events may include: 

  • longer-term refinancing
  • collateral property sale
  • an equity investment
  • sale of another property
  • distributions from a business
  • distributions from other investments
  • sale of investments
  • receipt of a judgment or settlement (including divorce)
  • inheritance
  • other monetary events

Speed in providing the loan is often important.  To avoid delays, lenders may ignore income and other items. Verifying aspects of income can be time-consuming. Bridge loans may have higher costs. Bridge loan amounts are often limited by a loan-to-value ratio.  This avoids time spent on other items. Bridge loans that are asset-based may be described as hard money loans.

People often take bridge loans because they need the funds quickly. An opportunity may disappear if they do not act quickly.  Partner buy-out time limits. Sellers may take other offers. Price may go up. Sale may be canceled. People may need money to avoid other consequences.  People need money to avoid default, forfeiture, credit damage, lawsuits, etc. Often the advantages of a quick bridge loan far outweigh the costs.

We provide Colorado bridge loans for 2 days to 3 Years. Our bridge loans are secured by real estate. This avoids time on spent income verification.

A quick short-term loan origination can be valuable.We understand a speedy loan process is valuable.

Our loans are secured by real estate in the following:

  • Denver Area
  • Boulder Area
  • Colorado Springs Area
  • Fort Collins Area

Call (303) 500-3200. 

Investment residential and commercial real estate only.

New Programs and Lower Interest Rates Coming In April 2019

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Good Funds Lending, LLC is excited to announce more loan programs and loan programs with lower rates coming in April 2019. We work hard to provide Colorado hard money loans with low rates. We are happy to be a part of the Denver Metro community and happy to see our borrowers improve the communities. Stay tuned…

Custom Denver Bridge Loans – Colorado Hard Money

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We offer custom Denver bridge loans at competitive rates for up to 3 years.

Sometimes property owners are waiting for permanent financing or other bank loans. And sometimes the bank or other lender needs more time because of the lender’s processes, or a borrower credit clean up or a income history for the property is needed. That is when short term bridge loan provided quickly can help. Because bridge loan provides financing while the borrowers are securing longer term financing, it “bridges” the financing gap. Situations are different, and that is why we provide custom Denver bridge loans.

By custom Denver bridge loans, we mean short term (up to 3 years) hard money loans in the Denver Metro Area of Colorado.

Properties in the Denver Metro Area:

  • Flip or Income Single Family (non owner occupied) – Up to 70% LTC/V*
  • Multi-unit residential (2-40 units;non owner occupied)  – Up to 70% LTC/V*
  • Retail, Office, Commercial, Industrial – Up to 60% LTC/V*

*LTC/V means the loan to cost (LTC) or loan to value (LTV) ratios.

Call us (303) 500-3288
Contact us on the web

Want a term sheet or to start the application process? Submit a Loan Inquiry (free)

Lower Rates: 6% – 9%

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Hard money loans with lower rates.

Lower Rates
For up to 70% of Net Purchase Price (or 70% of current market value)

  • Interest rates = 9%
  • Lender Origination Fee = 2%
  • Lender Documentation Fee = $1,000
  • No appraisal fees required
  • 180-day loan

Other terms and conditions apply. See more details…

For up to 30% of Net Purchase Price (or 30% of current market value)

  • Interest rates = 6%
  • Lender Origination Fee = 2%
  • Lender Documentation Fee = $1,000
  • No appraisal fees required
  • 180-day loan

Other terms and conditions apply. See more details…

Custom longer-term loans also available for investment residential, industrial, and commercial properties.

We use common sense underwriting to quickly provide loans. We try to be transparent regarding our rates and fees so that we are your clear choice.

More reasons why we are the Colorado hard money lender for experienced investors™.

We provide short term hard money loans (aka Colorado bridge loans) secured by investment and commercial properties only. Borrowers nor their family may not reside in the property (or use the property for personal, family, or household use).

Maximum Loan Amount Increased to $650,000 Per Property

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We have increased the lending limits to $650,000 per single-family detached. You can find more details regarding the loan programs on the Fix & Flip Loan Page or the more details to Fix & Hold Loan Page)

Good Funds Lending, LLC is focused on being the best hard money lender for experienced investors in the Colorado Denver Metro Area. Inquire about a Denver Colorado Hard Money Loan with Good Funds Lending

Alternatives to Hard Money

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It is important to us to act to ethically and feel good about our business; therefore we want our potential borrowers to carefully consider all their potential options before deciding if hard money loans make sense for them.

Common solutions that may be less expensive than hard money include (this is not a comprehensive list):

  • Personal savings or personal investment accounts
  • Self Directed IRA
  • Home Equity Lines Of Credit (HELOC) or other loans based on a borrowers existing assets
  • Friends & Family Loans
  • Loans from traditional channels including national banks, regional banks, community banks and credit unions

When less expensive financing such as the above are not a good fit or will not work for reasons like the following:

  • Insufficient personal funds (savings, investment accounts etc.) available or insufficient to pursue multiple projects at once
  • Insufficient Self Directed IRA funds available or insufficient to pursue multiple projects at once
  • Insufficient HELOC (or other loans based on a borrowers existing assets) funds or insufficient to pursue multiple projects at once
  • Friends and family loans are not available
  • Friends and family loans are not an option for personal reasons
  • Traditional lenders can not make the loan fast enough to get the property
  • Loan will not be approved because the borrower has too many loans or properties with loans
  • Loan will not be approved because the property is not in habitable condition and requires repair
  • Loan will not be approved because the borrower does not have sufficient income
  • Loan will not be approved because the borrower has poor credit
  • Other reasons make the alternatives unattractive or unavailable, but the property is good investment

Hard money loan may be a good solution. However hard money is typically a relatively high costs loan and typically does not reduce your risks or obligations.

We are the Colorado hard money lender for experienced investors™. We provide our borrowers with flexible, quick and direct service and have lower rates and fees (compared to other Colorado hard money lenders).

We are not attorneys, accountants, or professional advisors and we recommend you consult your own advisors before acting. We make no claims, promises or guarantees about the accuracy, completeness, or adequacy of the information and none of the content should be advice or considered offer or agreement.

10 Overlooked factors that can make the property less attractive

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While not all Colorado hard money lenders may look this closely, the investor borrower can lose profits or even lose money when the after rehab value is lower than they expected. As a private Colorado Hard Money lender interested in having successful repeat borrowers, here are some of the factors that are frequently overlooked that may result in a lower after rehab value (i.e. sale price) that we consider in our after repair value estimate:

  1. Small first floor relative to other houses in the area (and comparable properties used for valuation)
  2. Low bedroom and bathroom count on the first floor relative to other houses in the area (and comparable properties used for valuation)
  3. Small master bedroom
  4. Relatively high traffic street where a family may be uncomfortable allowing children to play
  5. Nearby noise pollution (e.g. fire station within ¼ mile, close to a busy road, etc.)
  6. Visible eye soars from the property (e.g. direct views of trash dumps, industrial parks, etc.)
  7. Downwind issues (being close and downwind from trash dump, sewage treatment plant, factory, etc.)
  8. Being in flood plain or having bad drainage characteristics on the lot
  9. Garage or parking is not as good as the comparable properties used in the valuation
  10. Difficult to access (e.g. large blinds spots from driveways, steep drive ways, etc.)

This is not a complete list of all factors that may result in lower property value, but represents factors we frequently see overlooked.