California Hard Money Lending

Getting a loan from a bank isn’t always easy, if it’s possible at all. If you are looking to invest in California but are short on funds, California hard money loans may be the way to go.

In real estate, hard money loans are secured loans typically secured from an individual investor or a small group of private investors. When real estate investors need to look outside of the traditional banking system for funds, hard money loans may be an attractive option. California’s red-hot real estate market is prime for hard money lending.

California hard money loans

While much of the economy has recovered from the Great Recession, real estate funding sources are still quite cautious when handing out loans. Even if you have a great deal on the table, banks may not be interested in financing your project. This is where hard money loans come in.

With interest rates that can range anywhere from 7 percent to 14 percent, hard money loans cost more than traditional bank loans. However, if you can’t procure a bank loan, hard money may offer a route to a potentially profitable project. Hard money lenders are typically willing to take on a little more risk than banks, but you have to pay an interest premium to access the hard money market.

Typical hard money loans are 12-month loans requiring interest-only payments for the 12-month period. At the end of the term, a single balloon payment is required to pay off the entire principal balance. Because of the structure, hard money loans are popular for fix and flip investing, where you expect to complete the project and pull out your money in less than a year.

In California, where home prices have historically increased at a rate much faster than that of the rest of the country according to California Legislative Analyst’s Office (See Figure 1), fix and flips are an attractive real estate investing option. According to real estate investing website BiggerPockets, there are currently 182 active hard money lenders in California. In addition to hard money, crowdfunding is notably popular in California.

California Hard Money

Figure 1. Source:

Risks and possible benefits of hard money loans

Hard money loans are an alternative to bank loans in many cases; newer and experienced investors alike may turn to hard money to fund real estate development and improvement projects. But these loans are not without risks.

Because you are working with individuals and smaller investors, your borrowing experience is different with hard money than with traditional lending. Also, due to the nature of the interest-only, one-year term, a slow-moving or failed project could leave you with a big bill due, and no easy access to liquid funds from the property to pay it off. If you can’t renew the loan or find a way to refinance, you could be stuck in default, which is the worst outcome for everyone involved.

In California, there are additional risks over some other markets. California’s real estate laws are aggressively tenant friendly and designed to ensure landlords and developers don’t take advantage of their tenants. These extra regulations can lead to more expenses and obstacles on the path to profits.

San Diego hard money loans

At the southern tip of California, San Diego has great weather year-round and offers hiking, surfing and urban living. While homes tend to move quickly in this attractive city, there are plenty of opportunities for fixer-uppers in town.

California Hard Money


San Diego is home to great employers such as Qualcomm, Petco and Zesty, a low unemployment rate (4.2 percent) and plenty of listings to delve into on the hunt for your best opportunity. For more information, check out the RealtyShares hard money lending in San Diego page.

There are currently 24 homes for sale in San Diego that have “fixer-upper” in the description. In San Diego city limits, there are more than 2,000 properties listed for sale or foreclosure. According to Zillow data, the average home costs $588,600, and prices are projected to increase 1 percent over the next 12 months. In the last year, homes have increased by 5.6 percent on average, and the median price per square foot is $426.

Los Angeles hard money loans

The second biggest metro area in the United States, the Los Angeles area is home to 18.7 million Californians. The City of Los Angeles has a population of around 4 million. Known for sunny beaches, Hollywood glamour and a warm climate, Los Angeles is popular for a reason.

Los Angeles County has more than 22,000 properties listed for sale, according to data from Trulia. Prices have increased 7 percent over the last year. The average price per square foot in LA is $594, up from $540 last year.

California Hard Money



Ninety-five homes in Los Angeles have “fixer” in the description, indicating a potential opportunity for fix and flip profits. Click here for more information specific to Los Angeles hard money loans.

Orange County hard money loans

Redfin shows 6,162 properties for sale in Orange County, which lies between Los Angeles and San Diego. Eighty-two of the homes are described as a fixer-upper, according to RedFin.

Orange County includes the cities of Anaheim, Irving, Santa Ana, Dana Point, Huntington Beach and Laguna Beach. With 3.2 million residents, it is the third-most populated county in California. With a Mediterranean climate, Disneyland, multiple major sports teams and close proximity to Los Angeles, Orange County is potentially a great real estate investment area.

California Hard Money



Zillow data shows that the median home price is $676,600. Home prices have increased 4.1 percent over the past year. The median price per square foot is $404, just slightly over the metro area’s $401 per square foot average. Orange County was hit hard by the recent recession, but prices have bounced back to pre-recession levels. Price increases have slowed in the past few months, but there is no shortage of investment opportunity in this famous county.
There are currently 8,829 properties in Orange County listed on Zillow. As with other areas, RealtyShares is committed to bringing hard money dollars to Orange County. Learn more at the Orange County hard money loan page.

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Mark Spera
Mark Spera

Mark was the founder of a national e-commerce platform, where he led acquisition marketing. His writing and thought leadership has been featured in the Wall Street Journal, SF Chronicle, The Guardian, and Reason Magazine.