A hard money loan is often used by house flippers as it can avoid the financing difficulties often faced with conventional loans. This short-term loan makes it possible to finance a property in need of renovation and is best suited when the turnaround of the property is relatively quick.

Hard money lenders place more importance on the potential value of a property, as opposed to the value at the time of purchase, or the borrower’s background. Hard money loans can also be quick to acquire, taking as little as 15 days to secure.

Conventional loans typically have a more strict set of qualifications, for example, certain amounts of equity, a set debt-to-income ratio, minimum cash reserves or credit scores which must be met for the application to go through.