Hannah HammondFounder & CEO, HB Capital & The Firm RE · CEO of HB Capital | Helping CRE Developers & Investors Fund Deals Nationwide | Host of The Hannah Hammond Show

Here’s Exactly When To Choose Private Money Over A Bank

Name: Here’s Exactly When To Choose Private Money Over A Bank
Uploaded: 2026-03-04T19:05:58+00:00
Duration: 58 s
Channel: Hannah Hammond
Description: In this segment, the speaker outlines the fundamental differences between private money loans and traditional bank loans for real‑estate financing…

4 Mar 2026 · 1 min

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In this segment, the speaker outlines the fundamental differences between private money loans and traditional bank loans for real‑estate financing. Private money loans are secured by a first‑position deed of trust on the property, carry higher interest rates, and are typically short‑term, targeting non‑stabilized, value‑add assets such as fix‑and‑flip projects. They can be funded quickly—often within one to two weeks for residential deals and up to 30 days for commercial. In contrast, bank loans offer lower rates and longer terms but require extensive documentation, appraisals, and are generally limited to stabilized, lower‑risk properties. The speaker emphasizes that the choice hinges on the investor’s timeline, asset condition, and willingness to meet stricter underwriting criteria.

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So when should you use private money versus a bank loan? Well, there's two very distinct differences. Private money is the same thing. It's a loan usually secured by a first position deed of trust on the property, which means the property, the piece of real estate, is the collateral for the loan. If you don't pay it back, the lender can foreclose just the same way as a bank. The difference with private capital is generally they have higher interest rates. And the reason why is because they're generally shorter-term loans, and they'll usually lend on assets that are not stabilized. They're not pretty fancy assets. They're assets that need value added to them. So private money will generally lend to fix and flip investors, whether in the residential or commercial space. They generally will finance the deal much faster, in as little as a week or two in residential, sometimes up to 30 days in commercial. And a bank loan, while it's going to be a lower rate, it's going to be a longer-term loan, and it's also going to have a lot more requirements in order to get that loan and secure the deal. A lot more documentation. They're going to want an appraisal on the property, and they're going to want to make sure that that's a good asset, that's more of a stabilized asset that doesn't have a heavy lift.