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How to Conduct Due Diligence on a Hard Money Fund
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How to Conduct Due Diligence on a Hard Money Fund

5 Key Criteria to Evaluate Opportunities and Mitigate Risks

Leyla Kunimoto's avatar
Leyla Kunimoto
Dec 04, 2024
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Accredited Investor Insights
How to Conduct Due Diligence on a Hard Money Fund
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Hard money lending (HML) funds are having a moment in the sun - and for good reason: in today’s environment, earning double-digit yield secured with tangible real estate is an attractive proposition.

What’s a hard money loan? It’s a type of short-term loan secured by real estate, often used by borrowers who cannot or prefer not to obtain traditional financing (often used for fix-and-flips, or ground-up development). These loans are typically provided by private lenders or investment groups rather than banks. A hard money fund is an investment vehicle that pools capital from investors to provide such loans. For more on private credit funds that lend to companies, read this:

5 Key Considerations for Investors in Private Credit

5 Key Considerations for Investors in Private Credit

Kristopher Rymer
·
June 11, 2024
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While many HML funds generate 10%+ yield, not all of them are created the same. Today, we will discuss five criteria for evaluating hard money funds:

  1. Lender

  2. Borrower

  3. Collateral

  4. Loan Terms and Performance

  5. Fund Structure

Let’s jump in!

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