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Hard Money Lending Explained: How Smart Lenders Win Long-Term

By January 21, 2026Real Estate Pros Show

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Show Summary

In this episode of the Real Estate Pros podcast, host Michelle Kesil interviews Jason Balin, a seasoned private lender with over 20 years of experience in the real estate market. Jason shares insights into his journey from being a mortgage broker to running a successful hard money lending company. He discusses the importance of local market knowledge, the challenges faced in lending, and the significance of having a robust marketing strategy to ensure a steady flow of deals. Additionally, Jason highlights the common mistakes new lenders make and the value of building a community through mastermind groups. He concludes with thoughts on the future of the lending market and the opportunities that arise during market shakeups.

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    Investor Fuel Show Transcript:

    Jason Balin (00:00)
    on paper it’s like, oh, they don’t pay, you can just take the house. Right, but in real life it doesn’t work like that. And especially in, you know, judicial foreclosure states where the process could take years, multiple years.

    you know, taxes are due, insurance is due. Typically, if you have a foreclosure case, it’s not like the borrower just wipes their hands clean and says, okay, no problem, just take my property. You know, they’ll go and they’ll try to sue you. And then you have a contested, then you got to contest your foreclosure case. The problem is

    is that takes, you know, managing a default or a bad deal takes 10x, 20x, 100 times the amount of work and effort and brain power than a performing deal. So having a deal here and there that goes bad is no problem. But as you grow percentage-wise, you’re going to continue to have more and more more defaults. So anybody can learn their way through one default. But then if you’re a small operator,

    and you just grow really, really quick and you have like 10 defaults going at a time, it’s a nightmare.

    Michelle Kesil (02:29)
    Hey everybody, welcome to the Real Estate Pros podcast. I’m your host, Michelle Kesil and today I’m joined by someone I’m looking forward to chatting with, Jason Balin who is a real estate private lender based in Maryland. So excited to have you here today, Jason.

    Jason Balin (02:44)
    Thanks, Michelle. Looking forward to it.

    Michelle Kesil (02:45)
    course, think our listeners are going to take something away from how you’re approaching lending through all of your real estate and market knowledge. So let’s dive in.

    Jason Balin (02:54)
    Absolutely.

    Michelle Kesil (02:55)
    First off, for those who are not familiar with you and your work yet, can you share what your main focus is these days?

    Jason Balin (03:00)
    Yeah. So I’ve been running a private lending and hard money lending company over the last 20 years in the Washington DC Baltimore area. cover a lot of East coast markets and that’s my focus 365 days a year is deploying capital responsibly to local real estate investors that are fixing and flipping houses and buying rental properties and buying commercial properties and just opportunistic kind of every day to try to find

    deals that make sense for us to deploy capital on and you know over time we’ve also created a community of other private and hard money lenders that want to kind of grow and learn together so they can responsibly also deploy their money in you know numerous different markets throughout the country.

    Michelle Kesil (03:46)
    Awesome. And when you say local real estate people, are you only serving like people in your local area?

    Jason Balin (03:47)
    Yeah, I mean, when I say local real estate, I mean, more like the assets are local. You know, there’s a lot of real estate investors that might be living in other parts of the country that are investing in, you know, Northern Virginia or Washington, D.C. or Baltimore, Philadelphia, New Jersey, you know, South Carolina, North Carolina, things like that. But yeah, local assets. mean, this isn’t always the most popular conversation when I say it, but I believe

    Real estate is very localized business model. So we like to only lend in areas that we’re comfortable with that is local. And I personally think it’s challenging to lend or invest in areas in different parts of the country. And I know that a lot of folks would disagree with that. But what’s worked best for us over the last 20 years is sticking to assets that are local to us and in areas that we’re very comfortable with.

    Michelle Kesil (04:37)
    Yeah, that makes sense. How did you become a lender?

    Jason Balin (05:29)
    So, you know, back up 19 plus years ago when we started Hard Money Bankers, which was 2007. A years prior to that, was doing some more, you know, was working as a mortgage broker and I was doing some loans and I will never forget that I was doing some loans and I brought this deal to my boss at the time.

    And he, who ran the mortgage company and I was like, listen, I was like, I don’t know why we can’t get this deal through. got nobody that’s going to buy this paper from us. It seems like a really good opportunity and a really good deal, but you know, we keep getting turned down. And he said, he looked at me he said, let me see that deal. Okay. The bar is putting down 50%. Yeah. His credit’s a little bit on the lower side. We’ll fund that deal in house. And I was like, well, what do mean by that? He’s like, well, I’ll put up the capital and I’ll lend him the money and you know, we’ll service the loan and it’ll be on our books.

    I was like, that’s something you can do. And he’s like, absolutely. We can just do it on the private. You know, we can be the, can be the investor, the private lender. can be the bank of America or the Wells Fargo. So that was a big aha moment for me. And I was like, wow. Like, you know, anyone can be a lender. And then, you know, a few years had gone by and we were owning, owned some real estate. was fixing and flipping some house houses. And I realized it’s like, wait a second, I’m doing all this heavy lifting, fixing and flipping houses.

    And the lender that I borrowed money from, if we fail or we succeed, he’s still making the same amount of money. And between those kind of two things occurring, I was like, I want to be on the lending side of the transaction, not necessarily the sponsor, the operator, or the flipper of real estate. I want to be the lender and control the capital. And that’s what we’ve done.

    Michelle Kesil (07:09)
    Awesome. What has been maybe some of the biggest challenge or obstacles that you’ve faced as a lender? And now, like, looking back in hindsight, you can kind of see what you learned from that.

    Jason Balin (07:11)
    Yeah, I mean I think as a real estate investor ⁓ Business owner entrepreneur lender, you know You’re learning every day and things are things are changing every day and I think a big mistake that a lot of lenders and real estate investors ⁓ Fall into the trap of doing too much too quick and they don’t see deals Like through the full cycle. So it’s like did this one deal and I made a lot of money

    I’m just going to go do five deals or six deals or seven deals. And what a business looks like 10 deals at a time compared to one deal at a time or two deals at a time is very, very, very, very different. So we’ve fallen in that trap several times over our career where we had to kind of be careful about growing too fast because we weren’t really set up for it. And I remember, you we called them different seasons in our business where

    we were kind of in a growth season where it’s like, we’re very well capitalized. We have infrastructure in place. Let’s go grow, grow, grow, grow, grow. And then we get to a point a year later and we’re like, hey, listen, let’s ratchet this down a little bit. We’re, we’re, don’t have the infrastructure in place. And then we’re kind of at like a status quo season to try to put, you know, the right people in place, the right software in place, ⁓ making sure we have the right capital partners and things like that in place. And then we can go and grow, grow, grow even more. But I think it’s important.

    to just see deals cycle through. Like you gotta see things happen and if you’re a newer lender, chances are you’ve never even seen a default yet or a foreclosure yet. And believe me, it looks a lot different in real life than it seems like on paper. You know,

    on paper it’s like, oh, they don’t pay, you can just take the house. Right, but in real life it doesn’t work like that. And especially in, you know, judicial foreclosure states where the process could take years, multiple years.

    you know, taxes are due, insurance is due. Typically, if you have a foreclosure case, it’s not like the borrower just wipes their hands clean and says, okay, no problem, just take my property. You know, they’ll go and they’ll try to sue you. And then you have a contested, then you got to contest your foreclosure case. So like there’s a lot of different things and having defaults or having bad deals is inevitable, right? You can be the best lender, you can be the best real estate investor. You’re always going to have bad deals on your books. That’s no problem. The problem is

    is that takes, you know, managing a default or a bad deal takes 10x, 20x, 100 times the amount of work and effort and brain power than a performing deal. So having a deal here and there that goes bad is no problem. But as you grow percentage-wise, you’re going to continue to have more and more more defaults. And you’re just not going to be set up to do that unless you do it in a responsible, timely manner. So anybody can learn their way through one default. But then if you’re a small operator,

    and you just grow really, really quick and you have like 10 defaults going at a time, it’s a nightmare.

    So we’ve learned that slow and steady wins the race and all of this doesn’t have to happen overnight.

    Michelle Kesil (10:11)
    Yeah, absolutely, that’s important. Yeah, especially when you’re here for like long term, you have to be in it for that vision.

    Jason Balin (10:18)
    Absolutely.

    Michelle Kesil (10:19)
    What are some of the main keys that you feel made the biggest difference in allowing your business to be able to grow and run successfully?

    Jason Balin (10:20)
    Thank you.

    So I would say that the biggest thing that we had that we subconsciously figured out early on, this was luck because I don’t think we realized this, was to create a marketing machine. And if you have a marketing machine and you have deal flow coming in all the time, and obviously it takes a lot of work, it takes a lot of time, it takes a lot of money in order to create an ongoing marketing machine. But if you constantly have deal flow coming in on a regular basis,

    It’s very, very difficult to fail because you’re always going to have opportunities. And too many real estate investors and lenders just aren’t marketing enough. They don’t have enough deal flow. When you don’t have deal flow, you do bad deals. And you if you got to have opportunities that are just coming in endlessly over and over and over and over and over. And I think the lenders, the real estate investors that have a big marketing machine, they’re just

    you’re not going to able to beat them. They’re just going to have a lot more success. And in the lending space, a big limited belief that lot of lenders have is, well, I’m not ready to do marketing because I don’t have enough capital to do the current deals that I’m doing already. And then my response to that is, well, you’ll just do better deals then. Because if you get 10 deals a month and have to close a few deals, or 10 leads a month and have to close a few deals, and I get 1,000 leads a month and have to close a few deals,

    whose deals are gonna be better. We’re still outlaying the same amount of capital every month, but my deals are just going to be better. It’s a fact because I have so many more leads and opportunities to cherry pick than you would.

    Michelle Kesil (12:33)
    Definitely. And what do you feel has gotten you the success in getting all those leads?

    Jason Balin (12:39)
    ⁓ I think it’s been motivating because we saw success with it early on. know, we saw of, listen, if we go to a lot of meetup and real groups, I mean, they’re meetups now. Back in the day, they were all real. They didn’t really have meetup. we, you know, we go to real meetup groups, we go to auctions, we go meet with brokers, real estate investors. We do, you know, pay per click advertisement, social media advertisement, YouTube videos. Like we would just do all the heavy lifting and we would see it come in.

    And over time, it feels overwhelming at the beginning, but over time, it ends up being just second nature and a habit. And because of that, it ends up working out.

    Michelle Kesil (13:17)
    Awesome. And what are you most focusing now when it comes to solving or scaling to the next thing in your business?

    Jason Balin (13:25)
    So marketing and automation has always been a very big thing that we do internally and that to this day we’re still doing that and I put a lot ⁓ of time, a lot of effort and a lot of money continuously into more marketing efforts and into more automation efforts. You know we onboarded ⁓ new CRM through Go High Level this past year and I’ve used lots of different CRMs over the years.

    And that was finally at a place where it was ready for us to kind of implement. But a lot of automation and a lot of marketing ⁓ over and over and over is what we’ve continued to focus on. we have focused on that for a long time. And I know I keep reiterating that, but that’s how important it is. And those are things that we’re continuing to stay focused on because understanding and learning real estate investing or wholesaling or lending, like it’s not brain surgery. It’s not that challenging.

    anybody can understand it. And you know, if you’re doing it at a slow enough pace at the beginning, you’re going to learn it. And as you continue to grow, you’re going to continue to learn hands on. So there’s not all that innovative stuff related to the actual keystrokes of doing a transaction. The important part is making sure you have deal flow for transactions, making sure you have capital for transactions, making sure you have the proper vendors to help you with the transactions.

    Michelle Kesil (14:40)
    Definitely. And I saw that you run a mastermind for lenders. Can you expand on what that looks like?

    Jason Balin (15:28)
    We do about eight or 10 years ago, had a ⁓ private lender that was in a market a few hours from us. And he reached out to us and he was like, Hey, I’ve got a lot, a lot of money on the streets deployed into loans. And I don’t really know what I’m doing. And I’m nervous. Can you guys teach me everything that you know about lending? And we’re like, well, we’re not really set up to do that. He was like, name your price and

    you know, and I’ll come to you and I’d love it if you could spend a day or two to me and teach me. So we named the price that was the big enough price tag that was worth our while, which looking back wasn’t nearly as expensive as it should have been. And we spent two days with him and we’re like, wow, this guy’s like a really successful, well, perceived successful lender. He’s got a lot of money and he’s done a lot of deals and he’s missing so many important things because this stuff isn’t taught.

    and it’s not all that readily available about how to become your own hard money lender, how to lend money privately. There’s a lot of sub-sectors about that, but not really running a full-service hard money lending company. So we started doing some content and some videos, and we started getting tons and tons and tons of subscribers and followers, and people were like, hey, you guys should start a group. So we started a mastermind group called the Hard Money Mastermind about eight years ago, and it’s literally just us talking about

    Stuff that happens inside our office every day. Case studies, defaults, where we’re finding deals, raising capital, everything. And we grew a community of almost 3,000 lenders throughout the country. And it turned into an online and an offline mastermind group.

    Michelle Kesil (17:03)
    Awesome. What do you feel are some of the biggest maybe like mistakes that people make when they’re starting off and that you like support them through as you teach them in this mastermind?

    Jason Balin (17:04)
    Yeah, it’s a good question because a lot of people make a lot of mistakes early on and most of them ⁓ are related to lending too high a leverage and really understanding how to underwrite a borrower. know, they believe that they, know, some one-off private lenders think that they need to compete with Kiavi or gigantic institutional-backed lenders who have billions and billions of dollars and this lender might only have five million to deploy and if you do one bad deal you could

    be out of business. So they’re trying to compete with the big boys and it’s a completely different type of game. You know, it’s a different game. So a lot of the mistakes can be overcome by creating a proper marketing machine, stuff that we talk about, that I’ve been talking about, you know, the last 20 minutes and having deal flow because a lot of them don’t have enough deal flow and they have their buddy that says, hey, I flipped a few properties before, you know, with a private guy, I’d like to use you and…

    You know, they want 100 % financing and very inexpensive fees and rating points. And that’s just a recipe waiting, disaster waiting to happen. You know, any market ⁓ correction, something happens and you’re losing, you’re losing money. And a lot of lenders are scared to not do high leverage deals because they’re afraid they’re not going to be get any deal flow. And instead they need to focus on finding opportunities and marketing for deals.

    Good things will happen.

    Michelle Kesil (18:39)
    Yeah, is there any strategy you have for people that are like struggling to find those opportunities and are maybe stuck in that stage?

    Jason Balin (18:48)
    So the lowest hanging fruit is the no cost, boots on the ground business development. Going to meet up groups all the time, raising your hand and saying, hey, I’ve got private capital. There’s 100 people in a room. And I recognize because the rebut that most people has is I don’t want to waste an hour or two hours going to a meet up group where the majority of the people in there are never going to do a deal. And they’re right. 80 % of that room might not do any deal.

    But 15 % of them probably will. And 5 % of them, which might be a few people, probably are really good borrowers that you could potentially create a relationship and work with. So I like to stick to very inexpensive or free marketing, advertising, business development at the beginning. So surround yourselves in areas that other real estate investors are in, which is meetup groups and REIA groups and going to auctions and going to real estate agents’ offices and mortgage brokers’ offices, building brands on social media and creating content.

    for real estate investors, all things that are free or very inexpensive to start with. After you do all that, like you will be able to do a few deals a month as a lender just based on that heavy lifting. After you get to that, then you can start introducing paid ads and things that you really do want to money behind.

    Michelle Kesil (20:02)
    Awesome, that makes sense. What are you most excited about for this new year when it comes to any changes in your business?

    Jason Balin (20:09)
    I mean, I’ve been excited for a long time to see what happens with the shakeup of institutional capital. ⁓ I think for fix and flip lenders, you know, they’re going to hold on to the institutional capital deals, loans that they can get from them just because they’re cheaper and they have higher leverage for as long as they can. But as the markets

    you know, shake up as the markets change as certain areas, the property stay in the market longer and longer and longer. Institutional lenders are probably going to be a little bit more conservative on stuff. They might decide to not be in the in the business at long. They might say, you know what, I’m only going to do DSCR loans. not going to do fix and flip stuff anymore. And we don’t mess with the DSCR loans because we’re doing short term stuff for the fix and flippers and kind of the one off opportunistic types of deals. So it’ll just help our market share. And, know, we’re

    very well capitalized and set up for that to happen. And we have been for a long period of time. So I think 2026 will be a spot where there’s a lot of shake up for real estate investors. I think I do truly believe that there’s still a lot of opportunities out there, good opportunities out there, because I see them. see real estate investors bringing me deals every day. I’m like, wow, that’s a really good deal that you just got under contract. So it’s there. And I also think that during market shake ups,

    the strong survive, the best real estate investors stay in the game. And the ones that, you know, are just do this as a hobby and, or just, you know, use the ML, the local MLS as their only acquisition strategy are going to suffer and it weeds out the good and the bad. I think market shakeups aren’t necessarily a bad thing.

    Michelle Kesil (21:38)
    Yeah, absolutely. That makes a lot of sense. So before we wrap up here, somebody wants to reach out, connect, learn more. Where can people find you and connect with you?

    Jason Balin (21:48)
    Yeah, so I’m pretty easy to find. You know, Jason, ⁓ you know, Google my name, Jason Balin or type in hard money bankers.com. mean, our lending company is hard money bankers.com. ⁓ and then we run our, our podcast called the private lenders podcast, private lenders podcasts to help other aspiring or experienced hard money lenders and private lenders. Or you can just email me at Jason at hard money bankers.com.

    Michelle Kesil (22:11)
    Perfect. Well, appreciate your time, your story, and your perspective. Thank you so much for being here.

    Jason Balin (22:12)
    Thank

    Michelle Kesil (22:17)
    Awesome. And for the listeners tuning in, if you got value, make sure you’ve subscribed. We’ve got more conversations with operators like Jason who are building real businesses. We’ll see you on our next episode.

    Jason Balin (22:19)
    If you got value, make sure you subscribe.

    See you on our next episode.

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