I was listening to a book on tape, and heard mention of hard money lenders. I had never heard of them before. They are a last resort source of money for investing in real estate.
Hard money funding is typically used to fund short term real estate investments. Hard money lenders will loan money to the investor at high interest rates then what you will find at a bank. Also they will loan you less money compared to what the property is valued (loan to value rates). The hard money lender will then assume a lien on the property. They will usually be in the 1st lien tier position, so in case of default, they are the first to be paid.
Often hard money loans are used to purchase real estate for the purpose of flipping. So even though the loan is at higher interest rate, it is only for short term. The borrower is likely to have to pay points as well.