--- title: Why Hard Money Loans Don’t Work for Rentals description: Hard money loans are an REI’s best funding tool for most types of investing, especially fix and flip investing. But there are a number of investing situations where hard money loans just … Why Hard Money Loans Don’t Work for Rentals Read More » image: https://www.theinvestorsedge.com/hubfs/Blog%20Media/ForRent-300x175.jpg --- [Skip to content](https://www.theinvestorsedge.com/blog/hard-money-loans-dont-work-rentals#main-content) [ Close ](https://www.theinvestorsedge.com/blog/hard-money-loans-dont-work-rentals#) - Courses - House Flipping - [Find Fund Flip System For Houses](https://www.theinvestorsedge.com/find-fund-flip-system) - Land Flipping - [Find Fund Flip System For Land](https://www.theinvestorsedge.com/land-flipping) - Software - Tools & Automation - [The Investor's Edge Software](https://www.theinvestorsedge.com/real-estate-investment-software/investors-edge/) - [Proof of Funds](https://www.theinvestorsedge.com/real-estate-investment-software/proof-of-funds) - [Next Property Roadmap](https://www.theinvestorsedge.com/real-estate-investment-software/next-property-roadmap) - [Mortgage Rate Historical Chart](https://www.theinvestorsedge.com/mortgage-rate-historical-chart) - 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Wholesale Properties - [Find Cash Buyers](https://www.theinvestorsedge.com/sell-properties/find-cash-buyers) - Investing Strategies - [Fixing & Flipping Houses](https://www.theinvestorsedge.com/fixing-and-flipping-houses) - [Wholesale Real Estate](https://www.theinvestorsedge.com/wholesale-real-estate) - [BRRR Method](https://www.theinvestorsedge.com/brrr-method) - [Blog](https://www.theinvestorsedge.com/blog) - [Podcast](https://www.theinvestorsedge.com/incomehacker) CALL US: [(801) 396-9772](tel:+18013969772) Search Suggestions ![ForRent-1920x1080](https://www.theinvestorsedge.com/hs-fs/hubfs/Blog%20Media/ForRent-1920x1080.jpg?width=300&name=ForRent-1920x1080.jpg) [Ryan G. Wright](https://www.theinvestorsedge.com/blog/author/ryan-g-wright)Feb 7, 2014 12:26:32 AM2 min read # Why Hard Money Loans Don’t Work for Rentals [Previous ](https://www.theinvestorsedge.com/blog/want-bigger-rehab-profits-tweak-perspective) [Next ](https://www.theinvestorsedge.com/blog/hard-money-loan-approval) - [Tweet](https://twitter.com/share) Hard money loans are an REI’s best funding tool for **most types** of investing, especially fix and flip investing. But there are a number of investing situations where hard money loans just don’t make sense, and investment rental properties are one of those situations. I still get tons of questions about why **hard money loans for rentals** don’t work, but the confusion is understandable. If HMLs work for fix and flips, why not rentals? Right? That’s exactly what I’m going to explain in this post. It will be crystal clear when you’re done reading.   ## How Hard Money Lenders Calculate Your Loan Amount The first reason why hard money loans don’t work for rentals has everything to do with the **loan amount** you want. As you probably already know, hard money lenders determine your loan amount based on the property’s After Repair Value. The more repairs you put into the property, the higher the ARV. The higher the ARV, the higher your loan amount. Following so far? The issue with rentals is that they see **fewer repairs** than permanent residence properties. So naturally, hard money loan amounts for rentals tend to be low because the ARV is low. **The Problem:** - **The investor probably won’t get the full loan amount they need to make the deal happen.** I say this speaking generally. If the investor has enough of their own capital to fill the gaps, then that would be an exception. But such cases are rare. ## ROI is a Timed Race In any investment deal, scoring a profit always breaks down to a **race against the clock**. Time is money in REI, and unfortunately, investment rental properties have a timetable all their own that doesn’t jive well with hard money loans. Here’s why . . . Hard money loans make it possible for investors to get into deals when there are no other options, but, by necessity, hard money loan costs have to be higher than the costs of traditional loans. This works out just dandy for fix ‘n flips because flips are engineered for fast turnaround. You buy the property, repair it and flip as fast as possible before that loan interest starts to add up. On the contrary, profits from investment rental properties usually **trickle in slowly** and lose the race against interest rates. **The Problem:** - **The investor does not make enough profit fast enough to keep up with the loan interest.** ## Exceptions to the Rule Like with everything, there are exceptions to what I’ve explained here. DoHardMoney *very occasionally* issues loans for investment properties under special circumstances, but 99% of rental deals that come our way don’t make it past the pre-approval stage. If you’re dead set on investing in rentals, my suggestion is to seek an alternative funding option. But if you’re looking for investments with fast turnarounds and big payoffs, I’d say stick to fix and flips and get those deals funded with hard money loans. To see how all of this works, register for our [next webinar](https://www.theinvestorsedge.com/register). ## RELATED ARTICLES USEFUL LINKS: --- - [FAQs](https://www.theinvestorsedge.com/faq) - [Areas Served](https://www.theinvestorsedge.com/areas-served) - [Terms of Use](https://www.theinvestorsedge.com/terms-of-use) - [Privacy Policy](https://www.theinvestorsedge.com/terms-of-use/privacy-policy) - [AI Info](https://www.theinvestorsedge.com/ai-info-page) OTHER RESOURCES --- - [Referral Program](https://www.theinvestorsedge.com/referrals) - [Become A Hard Money Lender](https://www.theinvestorsedge.com/become-a-hard-money-lender) - [Careers](https://www.theinvestorsedge.com/careers) - [Member Login](https://app.theinvestorsedge.com/authentication/login) - [Contact Us](https://www.theinvestorsedge.com/contact) [![New-InvestorsEdgeLogo-ForDark-257x100](https://23711988.fs1.hubspotusercontent-na1.net/hub/23711988/hubfs/A%20-%20Logos/New%20Logo/New-InvestorsEdgeLogo-ForDark-257x100.png?width=150&name=New-InvestorsEdgeLogo-ForDark-257x100.png)](https://www.theinvestorsedge.com) Keep the conversation going. Connect with us on Social Media: Copyright © 2025 TheInvestorsEdge.com All Rights Reserved ```json { "@context" : "https://schema.org", "@type" : "BlogPosting", "abstract" : "Hard money loans are an REI’s best funding tool for most types of investing, especially fix and flip investing. But there are a number of investing situations where hard money loans just … Why Hard Money Loans Don’t Work for Rentals Read More »", "author" : { "@type" : "Person", "name" : "Ryan G. Wright" }, "dateModified" : "", "datePublished" : "", "headline" : "Why Hard Money Loans Don’t Work for Rentals", "image" : "https://23711988.fs1.hubspotusercontent-na1.net/hubfs/23711988/Blog%20Media/ForRent-300x175.jpg", "inLanguage" : "en", "keywords" : "[★ Hard Money Loans]", "mainEntityOfPage" : { "@type" : "WebPage" }, "name" : "Why Hard Money Loans Don’t Work for Rentals", "publisher" : { "@type" : "Organization", "logo" : { "@type" : "ImageObject", "url" : "https://23711988.fs1.hubspotusercontent-na1.net/hubfs/23711988/Logos/New%20Logo/New-TheInvestorsEdgeLogo-ForLight-257x100-1.png" }, "name" : "The Investor's Edge" }, "text" : "Hard money loans are an REI’s best funding tool for most types of investing, especially fix and flip investing. But there are a number of investing situations where hard money loans just don’t make sense, and investment rental properties are one of those situations. I still get tons of questions about why hard money loans for rentals don’t work, but the confusion is understandable. If HMLs work for fix and flips, why not rentals? Right? That’s exactly what I’m going to explain in this post. It will be crystal clear when you’re done reading. How Hard Money Lenders Calculate Your Loan Amount The first reason why hard money loans don’t work for rentals has everything to do with the loan amount you want. As you probably already know, hard money lenders determine your loan amount based on the property’s After Repair Value. The more repairs you put into the property, the higher the ARV. The higher the ARV, the higher your loan amount. Following so far? The issue with rentals is that they see fewer repairs than permanent residence properties. So naturally, hard money loan amounts for rentals tend to be low because the ARV is low. The Problem: The investor probably won’t get the full loan amount they need to make the deal happen. I say this speaking generally. If the investor has enough of their own capital to fill the gaps, then that would be an exception. But such cases are rare. ROI is a Timed Race In any investment deal, scoring a profit always breaks down to a race against the clock. Time is money in REI, and unfortunately, investment rental properties have a timetable all their own that doesn’t jive well with hard money loans. Here’s why . . . Hard money loans make it possible for investors to get into deals when there are no other options, but, by necessity, hard money loan costs have to be higher than the costs of traditional loans. This works out just dandy for fix ‘n flips because flips are engineered for fast turnaround. You buy the property, repair it and flip as fast as possible before that loan interest starts to add up. On the contrary, profits from investment rental properties usually trickle in slowly and lose the race against interest rates. The Problem: The investor does not make enough profit fast enough to keep up with the loan interest. Exceptions to the Rule Like with everything, there are exceptions to what I’ve explained here. DoHardMoney very occasionally issues loans for investment properties under special circumstances, but 99% of rental deals that come our way don’t make it past the pre-approval stage. If you’re dead set on investing in rentals, my suggestion is to seek an alternative funding option. But if you’re looking for investments with fast turnarounds and big payoffs, I’d say stick to fix and flips and get those deals funded with hard money loans. To see how all of this works, register for our next webinar.", "url" : "https://www.theinvestorsedge.com/blog/hard-money-loans-dont-work-rentals", "wordCount" : "698" } ``` ```json { "@context" : "https://schema.org", "@type" : "BlogPosting", "author" : { "@type" : "Person", "name" : "Ryan G. 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In 2023, DoHardMoney.com was rebranded to TheInvestorsEdge.com. The company had outgrown hard money lending alone, since it now offers educational courses, proprietary deal-finding software, and expert support in addition to funding." }, "name" : "Is DoHardMoney.com the same as TheInvestorsEdge.com?" }, { "@type" : "Question", "acceptedAnswer" : { "@type" : "Answer", "text" : "No. The education, software, funding, and systems are built to walk a member through their first flip with no prior experience." }, "name" : "Do I need experience in real estate investing to work with The Investor's Edge?" }, { "@type" : "Question", "acceptedAnswer" : { "@type" : "Answer", "text" : "The Investor's Edge recommends having around $10,000 or more for flexibility in closing deals. Deals with substantial equity can qualify for up to 100% funding, meaning qualifying deals can close with $0 in closing costs. The Find-Fund-Flip system also teaches additional ways to close with less than $8,000 of the member's own money." }, "name" : "How much money do I need to get started?" }, { "@type" : "Question", "acceptedAnswer" : { "@type" : "Answer", "text" : "Traditional lenders evaluate the borrower's credit, income, and debt. The Investor's Edge evaluates the deal itself, lends against After Repair Value (ARV), funds faster, and works with rundown properties that conventional loans won't touch. Funding is equity-based and structured as a joint venture." }, "name" : "How is The Investor's Edge funding different from a bank loan?" }, { "@type" : "Question", "acceptedAnswer" : { "@type" : "Answer", "text" : "The Investor's Edge serves real estate investors in 45 of 50 U.S. states, with custom funding terms by region. Membership is not currently offered in California, Nevada, Utah, Alaska, or Hawaii due to legal constraints." }, "name" : "What areas does The Investor's Edge serve?" } ] } ```