They're somewhat like private investors. The only difference is that the personal investor generally utilizes a mortgage agent to put the deal together so that they do not need to manage the general public. That mortgage agent subsequently becomes a hard money lender. They may have a whole personal investor group to get cash from, possibly committing countless millions of dollars.
Hard money lenders serve very particular purposes and that's the reason why most folks have not heard of these unless they are property investors. When you get personal money like hard money, they do not usually possess the prerequisites which the banks have. You can know more about reliable hard money lenders in California at https://wilshirequinn.com/california-hard-money-lender/.
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They generally look just at the home being bought and base their financing on their property exclusively. You realize that there are repairs that will need to be made and the house is presently sitting vacant. The hard money lender will probably come in and provide you around 65% to 70% of after repair value. A few of that goes to closing costs, repair costs, and holding costs.
Another advantage is that you could close immediately. Occasionally based on how big this price you can close in 24 hrs for smaller possessions and 10-14 times are for bigger commercial prices. They rely on turning money over fast to create their gain and that's the reason why they can bill 5-10 points upfront only to do what they offer.
They do assume you will default on each loan but are not overly concerned due to the equity in your house. Hard cash is a superb alternative for repair and market bargains or mend and refi bargains so you don't need to take much money out of pocket.