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One of the advantages of hard money lending is its flexibility around collateral. While conventional lenders operate within rigid guidelines about what types of properties they'll finance, hard money lenders evaluate each asset more individually, which opens the door to a much wider range of transactions. For brokers, understanding what qualifies and what doesn't is essential to knowing which deals to bring to a private lender and how to present them.
Single-family residential properties are the most common collateral in hard money lending and generally the most straightforward to underwrite. Whether the property is in good condition or needs significant work, whether it's owner-occupied or investment, hard money lenders are typically comfortable in this space as long as the LTV supports the loan. Multi-family residential properties, from duplexes to small apartment buildings, also qualify in most cases, often with strong interest from lenders who value the income potential of the asset.
Commercial real estate is another area where hard money lending is active, though it requires more nuance. Office buildings, retail properties, mixed-use developments, and industrial assets all have a place in hard money portfolios, but lenders will pay closer attention to market conditions, occupancy, and the borrower's commercial real estate experience. Distressed commercial properties follow similar logic. The deal can work, but the story needs to be stronger and the equity cushion typically needs to be more substantial.
Land and non-traditional assets occupy a more complex part of the spectrum. Raw land is notoriously difficult to finance because it produces no income and its value is harder to establish with precision. Some hard money lenders will consider land loans under the right circumstances, typically at very conservative LTV ratios. Unique or specialty properties, such as hospitality assets, gas stations, or properties with environmental considerations, require lenders with specific experience in those asset classes. At JMJ Funding, we're transparent about what we will and won't consider, and we're always willing to have an early conversation to help brokers determine whether a deal is a fit before they invest time in a formal submission.
