Hard money continues to be one of the leading alternative funding sources in America. Borrowers turn to hard money to fund real estate investments. They use hard money to grow their businesses, manage their debts, and generally help achieve certain financial goals. But hard money is not the only game in town. We get it.

We also know that hard money lending isn’t the right choice in every situation. But compared to other forms of alternative funding, hard money is hard to beat in many situations. It brings so much to the table. With that in mind, let us compare hard money with other alternative funding sources.

Hard Money vs. Bootstrapping

Bootstrapping is just another name for self-funding. Let’s say you would like to buy your first investment property but wanted to avoid traditional bank financing. You could use your own financial resources including your savings, a portion of your retirement account, the equity line of credit you have on your home, and even your credit cards. Bootstrapping is actually fairly common for business startups. That aside, let us stick with purchasing an investment property.

We would never say it is impossible to entirely fund investments through bootstrapping. We would say that doing so is unlikely unless you are already pretty well off. Hard money is a better option because you have access to a lot more. Very few hard money lenders who lend for real estate transactions wouldn’t be able to cover the acquisition of a single property. So long as the property has sufficient value and you have the appropriate down payment, your chances of approval are pretty good.

Hard Money vs. Crowdfunding

When crowdfunding is applied to something like real estate investing, you are not getting contributions from thousands of individuals donating $100 each to a startup. Instead, you’re hitting up family members and friends to help you. This is certainly a workable option, but would you be able to drum up enough to cover your investment?

Not only that but borrowing from family members and friends is risky business. It is a recipe for unhappy relationships. Funding your investment with a hard money loan keeps everything at a business level. Nothing is personal. No one’s feelings are at risk of being hurt. It’s just business.

Hard Money vs. Equity Funding

If you were embarking on plans that would eventually lead to you being a big-time property investor with hundreds of properties in your portfolio, you might be able to convince a private equity firm to kick in the funding to help you get started with your first investment. Private equity firms tend to have a lot more money to work with than your family members, friends, and even you. The one downside to private equity is ownership.

Equity investors tend to want to protect themselves by maintaining some sort of ownership in the businesses they invest in. That means they also want to call some of the shots. With private equity, you are sharing at least partial ownership or part of your profits with the equity investors.

A hard money loan is just a loan. Again, it is a business transaction between you and the lender. You maintain full ownership of the property. You do with it as you please. You make all your own decisions. All the hard money lender cares about is getting their money back. Pay off your loan as agreed and that’s it.

There are other alternative forms of funding that could help you launch your property investing dream. From our perspective though, hard money is among the best options for property investments.