Key Takeaways
- Hard money closes in 5-14 days; draw cycles take 5-10 business days each.
- Sale exits take 60-120 days; refinance exits depend on seasoning requirements.
- Extension provisions and backup exit strategies are essential for maturity risk management.
- Private lending triggers state licensing, usury, and Dodd-Frank compliance requirements.
This recap consolidates the execution and compliance knowledge for hard money and private lending transactions. Test your understanding with the review questions below.
Hard Money Execution Summary
Hard money execution operates on compressed timelines (5-14 days to close), with draw management adding ongoing operational complexity during the project. Sale exits take 60-120 days from completion; refinance exits require seasoning compliance. Extension provisions, maturity risk management, and backup exit strategies are essential components of project planning. Regulatory compliance—including state licensing, usury laws, and Dodd-Frank exemptions—applies to both borrowers and those transitioning to the lending side.
Compliance Matrix
Sources
- National Private Lenders Association — Industry Statistics(2025-01-15)
- Scotsman Guide — Private Lending Market Report(2025-01-15)
- FRED — Federal Funds Effective Rate(2025-01-15)
- CBRE — Capital Markets Investor Survey(2025-01-15)
Common Mistakes to Avoid
Treating hard money execution as a simple transaction rather than an actively managed process
Consequence: Poor draw management, missed compliance requirements, and delayed exits that compound carrying costs
Correction: Create and follow a project management timeline that tracks draw requests, inspections, compliance deadlines, and the refinance/sale exit process
Failing to understand state-specific foreclosure timelines and borrower protections
Consequence: Lenders may face 12-18 month judicial foreclosure delays in some states; borrowers may lose properties faster than expected in non-judicial states
Correction: Research the foreclosure process in your state before closing: judicial vs. non-judicial, redemption periods, and deficiency judgment rules
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Test Your Knowledge
1.How long does a typical hard money draw cycle take from request to disbursement?
2.When should an investor begin marketing a fix-and-flip property?
3.What document exempts a hard money loan from Dodd-Frank ATR/QM rules?
4.What is the recommended approach when a fix-and-flip encounters budget overruns?