I investigated hard money lending somewhat seriously for myself in early 2010. The quote you need to remember is hard money lenders “loan to own”.
That is, hard money lenders expect either to get paid back quickly (thus the high points charged) or they expect to make money by foreclosing and taking your down payment (thus the high down payment). As stated above the risk is mitigated almost entirely by the % down payment required which will be the equity the hard money owner is comfortable having in the property if you can’t make the payments.
After my escrow fell through 6 months ago I’ve been content to wait another 1-2 years to see if the low end prices come back from the tax credit bounce. It is starting to look OK this fall but the spring bounce is right around the corner 🙁
