While most people who have anything to do with real estate have heard of hard money, there are still many who can’t imagine a use for it.

Who can blame them? The rates and fees are higher than banks charge and they require a bigger down payment. So, why would anyone use it?

Actually, there are many reasons. Maybe the property is in poor condition or has problems with permits. It could be that the borrower has bad credit or can’t prove income to the satisfaction of the bank.

Regardless of the reason one would look for a hard money loan, there is a very simple way to figure out if it makes sense to use it.

All you have to do is “run the numbers”. In other words, use simple math to figure out if the deal is profitable even with the higher rates and fees. If it’s profitable, it works. If not, there’s not need to go any further.