"Private money lender" covers two very different things. One is a person, a retired landlord or a dentist with savings, lending their own money against your deal. The other is a private lending company with published programs and its own underwriting. Both can be near you, and both can be the right choice. This page shows where to find each one, how a loan from a person should be put on paper to protect you both, and the signs that a "private lender" is neither.
A person. Someone with money that is earning little in a bank or an investment account, who would rather be paid interest secured by a house. Often a retired investor, a business owner, or someone lending out of a self-directed retirement account. Their terms are whatever you negotiate. Their capacity is whatever they have, and it ends when it runs out or when their own life changes.
A private lending company. A business that raises capital from investors and lends it under published programs, with its own underwriting, appraisals, draw inspections and closing process. Terms are set in advance, and it can fund your next deal and the one after that. Dominion Hard Money arranges financing through this kind of lender.
Neither is better in the abstract. A person can be cheaper and more flexible on a small deal with an unusual story. A company can be faster, can lend more, and does not have to be asked twice. Many investors start with one person, then add a company as their deals get bigger or more frequent.
The county recorder. This is the source almost nobody uses. When anyone lends against real estate, the mortgage or deed of trust is recorded in the county where the property sits, and it names the lender. Search your county's recorded instruments for recent investor purchases and you will find individuals and small LLCs appearing as lenders again and again. Those are your local private lenders, and the record often shows the loan amount too. Many counties put this search online for free.
Title companies and closing attorneys. They close private loans every week and know who funds them. They will not hand out a client list, but ask whether any of their investor clients lend, and whether they would pass your name along.
Real estate investor association meetings. Most metros have at least one. Lenders go to be found, and the conversations are easier in person than by message.
Financial advisers who handle self-directed accounts. Owners of self-directed IRAs can lend against real estate, and many want secured investments they can understand. There is one hard rule to know first, covered below.
People you already know. The most common first private lender is someone who has watched you work. That is also where the paperwork matters most, because a friendship does not survive a vague deal that goes wrong.
A private loan from an individual should look, on paper, much like one from a company. That protects the lender, and it protects you from a misunderstanding that can cost you the property.
A promissory note. The amount, the rate, the payment schedule, the maturity date, what happens if you pay late, and what happens if the house has not sold by the due date. Write down the extension terms now, while everyone is friendly.
A recorded mortgage or deed of trust. This secures the note against the property and puts the lender's claim in the public record. A lender without a recorded lien is trusting your word, and your future buyers and other lenders will not see them.
A lender's title policy. It protects the lender if a title defect surfaces later. It costs little next to the loan, and a serious lender will ask for it.
The lender on the insurance. Name the lender as mortgagee on the property's insurance policy, so a fire does not leave them unpaid.
A title company or attorney closing. Money moves through escrow, not by personal check, and the documents are recorded properly. It also gives both sides a neutral record of what was agreed.
Written draw terms if the loan funds a renovation: how much is released, when, and against what proof of work.
One more line to know about. Borrowing from one person is a loan. Pooling money from several people who expect a return from your work can start to look like an offer of securities, which carries its own federal and state rules. If you are raising from more than one or two people, talk to a securities attorney before you take a dollar.
A self-directed IRA can make a real estate loan, and some of the most patient private money in any town sits in these accounts. But federal tax law bars the account from dealing with disqualified persons, and lending to one is a prohibited transaction.
Disqualified persons include the account owner, their spouse, their parents and grandparents, their children and grandchildren, and the spouses of those children and grandchildren, along with businesses they control. So an unrelated investor can lend to you from their IRA. Your father cannot, and neither can you from your own.
The consequences land on the account owner, and they are severe, so a lender using retirement money will want the loan structured through their account custodian. If a relative offers to lend from their IRA, the answer is to have them talk to their custodian and a tax adviser first.
Search for private money and some of what you find will not be a lender at all. The Federal Trade Commission has long warned that legitimate lenders do not guarantee a loan before you apply, and it has brought cases against operations that charged business borrowers upfront fees for financing that never arrived. Walk away if you see:
A guarantee before anyone has seen the property. Private lenders lend against the deal. Until they have looked at it, nobody can promise anything.
A fee before written terms. An appraisal is a real cost, paid to an appraiser. A "processing" or "commitment" fee paid to the lender before you have a written term sheet is the pattern the FTC describes.
Money wired to a person. Legitimate funds move through a title company or attorney's escrow account.
No lien. Anyone lending real money records their claim against the property. Someone who does not care about the lien is not planning to lend.
Pressure to decide today, before your own attorney or title company has read the documents.
A person lending their savings is a relationship worth having. A company is often better when:
The deal is bigger than one person's money. Our lending partners' fix and flip and bridge loans run from a $50,000 minimum, up to 100 percent of cost and 70 percent of after-repair value, with a 600 minimum credit score. The 10.99 percent starting rate is available after two loans have been paid off in good standing with our lending partner; a first-time borrower should expect to start above it and earn the way down.
You want to hold the property. DSCR rental loans run from $75,000 to $2 million at up to 80 percent of value, with rates from 5.99 percent on the program page, qualified on the property's rent rather than your income.
You are building from the ground up. Construction loans on non-owner-occupied single-family homes run from $100,000 to $3 million, from 8.5 percent.
You plan to do this again. A company with published programs funds the second deal on the same terms as the first, without asking anyone to find more savings.
All of it is business-purpose lending on non-owner-occupied property, and terms change, so we confirm the current program for your deal and your state. Send it through the form below and our lending partner's team will take it from there.
Mostly, yes. Both are loans from a non-bank lender, secured by the property and priced for speed rather than for the lowest rate. People tend to say hard money for a lending company with set programs and private money for an individual, but the terms overlap and many companies use both.
Start where local deals get closed: real estate investor association meetings, the title companies and real estate attorneys who handle investor closings, and the county recorder, where mortgages and deeds of trust name every lender, including individuals. Financial advisers who work with self-directed retirement accounts are another route.
An individual's rate and points are whatever the two of you agree, which is why they vary so widely. A private lending company publishes its terms: our lending partners' fix and flip program starts at 10.99 percent with 1.99 points for repeat borrowers, and a first-time borrower should expect to start above that.
Yes, a self-directed IRA can make a loan secured by real estate, but not to just anyone. Federal tax law bars the account from lending to disqualified persons, which include the account owner, their spouse, their parents and grandparents, their children and grandchildren and those children's spouses. A friend or unrelated investor can lend from their IRA; the owner's son cannot borrow from it.
Individuals often do not, and nothing requires them to. Lending companies generally do: our lending partners' fix and flip program lists a 600 minimum score. Either way, the property carries most of the decision, so a clean title, a supported value and a real exit plan matter more than the score.
Be wary of anyone who guarantees approval before seeing the property, asks for a fee before issuing written terms, or wants money wired to a personal account. The Federal Trade Commission warns that legitimate lenders do not guarantee a loan before you apply, and it has pursued schemes that charged business borrowers upfront fees for loans that never came.
This page is general information, not legal or tax advice. Retirement-account rules: Internal Revenue Code section 4975. Fraud warnings: Federal Trade Commission guidance on advance-fee loan scams. Lending terms: our lending partners' published program page; terms change and are confirmed for your deal.
Lending to landlords, or borrowing to become one? Our two free landlord books lay out what a rental really costs to carry.
Answer these and your deal goes to our lending partner's team, who will contact you about whether it is fundable and on what terms. By sending it you agree to your details being shared with them. Investment property only — our lending partners do not finance a home you will live in.
Thank you. Your details are on their way to our lending partner's team, who will contact you shortly.
Dominion Hard Money does not lend its own funds; it arranges financing through third-party lending partners. All financing is arranged for business purposes only and secured by non-owner-occupied investment property. Not a commitment to lend. All loans subject to underwriting, property review, and approval by the lender. Terms vary by property, borrower experience, and exit strategy.