Why Hard Money Loans?
Real estate investing is one of the most effective ways to build wealth, but securing the right financing can be a challenge. Traditional bank loans often come with long approval times, rigid requirements, and limited flexibility—none of which are ideal when speed and adaptability are crucial.
That’s where hard money rehab and construction loans come in. These fast, flexible loans provide real estate investors with the capital needed to acquire, renovate, or build properties without the delays and restrictions of conventional financing.
Whether you’re flipping a distressed property or starting a new construction project, understanding how these loans work can be the key to unlocking your next profitable investment.
What Are Hard Money Loans?
Hard money loans are short-term, asset-backed loans from private lenders like Cetan Funds. Unlike traditional financing, which relies heavily on a borrower’s credit score and financial history, hard money loans are secured primarily by the value of the property itself.
Real estate investors commonly use these loans for:
- Fix-and-flip projects
- New residential construction
- Rental property acquisitions
- Commercial developments
- Land acquisition and development
Among the various hard money loan options, rehab loans (fix-and-flip loans) and construction loans stand out as essential tools for investors looking to scale their businesses quickly.
How Hard Money Rehab Loans Work at Cetan Funds
Rehab loans—also known as fix-and-flip or fix-and-rent loans—provide financing for purchasing and renovating distressed properties. These loans allow investors to make necessary improvements and either sell the property for a profit or rent and refinance the property to hold long-term.
At Cetan Funds, our rehab loans can cover:
- Up to 90-95% of total project costs
- Up to 70-75% of the property’s after-repair value (ARV)
Key Benefits of Rehab Loans:
- Cover purchase and renovation costs
- Designed for distressed or undervalued properties
- Quick funding to help investors stay competitive
- Loan amounts may be based on the after-repair value (ARV)
Please note: final loan terms vary depending on many factors including the property location, property type, borrower qualifications, etc.
How Hard Money Construction Loans Work at Cetan Funds
Fix-and-flip projects aren’t the only way investors use hard money. Cetan Funds also provides construction loans tailored for builders and developers looking to finance new projects from the ground up.
Our construction loans also offer:
- Up to 90-95% of total project costs
- Up to 70-75% of the finished property’s projected value
- Short-term financing (6–18 months)
Construction loans are similar to rehab loans but entail a larger construction credit line which is advanced gradually as the work is completed. Another important difference is that construction loans require approved plans and permits before our funding can be secured. So, typically a builder/developer would need to go through their planning and permitting process before closing on a construction loan. In that case, the construction can potentially reimburse some of the costs incurred by the borrower to get the project to that point.
Key Benefits of Construction Loans:
- Designed for new builds, from single-family homes to multi-unit developments
- Loan amounts may be based on the completed property’s projected value
- Funds disbursed in draws and interest is only charged on funds drawn
Please note: final loan terms vary depending on many factors including the property location, property type, borrower qualifications, etc.
Understanding Construction Holdbacks
A crucial part of construction loans is the draw process, where funds are disbursed as work is completed.
Common Questions About Construction Holdbacks:
Why do lenders hold back funds?
Lenders release funds gradually to protect their investment, ensure project completion, and confirm funds are being used appropriately.
How does the process work?
Borrowers receive an initial portion of the loan, with the remaining funds held back for construction. As work is completed, borrowers request additional funds through a structured draw process.
How do draw requests work?
Borrowers submit draw requests—typically up to twice per month—including a breakdown of costs, proof of work completion, and invoices over a certain amount depending on the project. At Cetan Funds, we process draws within 24–48 hours if we get everything we need, ensuring funds are available quickly. We can wire funds or even cut checks to the borrower or directly to their contractors in certain situations.
The Cetan Funds Advantage
Cetan Funds is a pooled private equity fund. As a direct lender, we manage the entire loan process in-house—eliminating unnecessary delays and middlemen. Our expertise in short-term financing for land purchases, development, new construction, and rehabs has made us a trusted partner for real estate investors throughout Oregon and Southwest Washington.
Why Investors Choose Cetan Funds:
- Fast Approvals & Funding: Loan decisions within 2–4 business days, with funding available in as little as 7 days.
- Locally Managed, Direct Lending: No loan brokering or reliance on Wall Street funding—everything is handled in-house.
- Flexible Loan Terms: We tailor financing solutions to fit each investor’s unique needs.
- Interest-Only Payments on Drawn Funds: Lower carrying costs and better cash flow management.
- More Secure Funding Model: Our pooled fund structure ensures stability and mitigates risk.
- Long-Term Relationships: Many of our clients return for multiple projects, benefiting from consistent, reliable funding.
- No Fees for Construction Draws: Unlike many lenders, we don’t charge extra fees for accessing your construction funds.
Build Wealth Through Real Estate with Cetan Funds
Whether you’re a real estate investor, homebuilder, or contractor in Oregon or Southwest Washington, we’re here to help finance your next project.
Contact us today or visit our Loan Programs page to learn more about how our hard money rehab and construction loans can help you grow your portfolio and maximize returns.
Loan Inquiry
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General Investor FAQs
What is Cetan Income Fund’s Investment Objective?
Cetan Income Fund and Cetan Opportunity Fund (the “Funds”) are real estate debt funds that deliver consistent and attractive risk-adjusted returns to investors who seek preservation of capital and income.
Who Manages The Fund?
Our CEO, Mary Merriman, manages the Fund and lending operation. She has over 40 years of lending experience, holding a variety of executive-level positions at banks and an economic development lending organization. Steven Yett is actively involved in daily operations, fund management, and business development. Zach Smith is also an integral part of the team, leading loan originations and other business development activities. To learn more, please visit our Meet the Team Page or contact us.
Can Anyone Invest?
Cetan Income Fund: This Fund is only open to accredited investors with a net worth of $1,000,000 excluding their primary residence, or annual income of $200,000 for single filing status or $300,000 for joint filing status. This Fund is open to investors from anywhere in the United States.
Cetan Opportunity Fund: This Fund is only open to Oregon residents with either 1) a minimum annual gross income of $70,000 and a minimum net worth of $70,000 excluding their home, home furnishings, and automobiles; or 2) a minimum net worth of $250,000 excluding their home, home furnishings, and automobiles.
Can I Invest with IRA Funds?
Yes. Investors with a Self-Directed IRA account can invest in the Fund. Currently, we are well below our 25% threshold.
If you do not have a Self-Directed IRA account, we can help you create a self-directed IRA (SD-IRA) account and use those funds to invest in the Fund. Please contact us with questions and a list of IRA custodians we have worked with in the past.
How Do I Track My Account Balance?
We provide investors a secure online investor portal to access subscription documents, quarterly statements, fund financial information, investor updates, and tax documents.
How Do I Withdraw My Investment?
Every equity investment has a 12-month “lock-up” period where withdrawals are only allowed for hardships and early withdrawal fees may apply. After this “lock-up” period, investors may withdraw at any time with at least 60-day notice.
How is Risk Mitigated?
Management actively monitors our real estate debt fund and mitigates risk by deploying several strategies:
1. We maintain a diversified portfolio of loan types, loan purposes, and geographic locations in Oregon and SW Washington. Our loan types consist of residential and commercial loans with subtypes of new construction, rehab, acquisition and development, and bridge/term. We only finance business-purpose loans that provide funding for purchases, refinances, rehabs, new construction, and development.
2. The portfolio’s weighted average loan size is typically below $500,000, so our transactions are small. Therefore, the projects tend to be more resilient given the high demand for affordable housing and when faced with conditions that negatively affect the real estate market.
3. Generally, our loan-to-value (LTV) ranges are from 60-75% in Cetan Income Fund and 65-80% in Cetan Opportunity Fund, with a portfolio target of a weighted average LTV at 65% or less for Cetan Income Fund and 70% or less for Cetan Opportunity Fund. To determine value we complete an internal evaluation that uses a variety of sources, including an Automated Valuation Model, Broker Price Opinions, as well as our direct sourced market and comparable data. On properties with a unique purpose or for larger loans, we typically order appraisals.
4. Loans are typically secured with first position liens. Cetan Opportunity Fund may also selectively fund loans secured with second position liens.
5. In Cetan Income Fund, loan terms range from 6-36 months with the weighted average asset life in the loan portfolio target of 12-15 months. In Cetan Opportunity Fund, loan terms range from 6-60 months with the weighted average asset life in the loan portfolio target of 15 – 21 months.
6. We use leverage minimally as it is not a permanent funding strategy. Cetan Income Fund has a bank line of credit that is used to meet temporary liquidity needs but rests it at $0 frequently during the year. Cetan Opportunity Fund, on the other hand, was recently launched in 2023 and does not currently use leverage. Once the Cetan Opportunity Fund reaches $5 million in assets under management, we may establish a bank line of credit to use to meet temporary liquidity needs. Management will always limit leverage in both Funds to a maximum of 20 – 25% of assets under management.
Why Do Banks Not Make These Loans?
This is because of several factors, including regulatory constraints, banks’ large overhead expense making smaller loans unprofitable transactions, and obtaining a bank loan often takes too long, or the process of obtaining it is complicated and expensive.
Though the typical borrower is creditworthy, they are seeking a loan that is not readily available from traditional banks and credit unions. Cetan Funds addresses this credit and service void in the marketplace by taking reasonable risk while processing applications with speed, transparency, and accuracy.
What Distinguishes Cetan Funds From Other Non-traditional Lenders?
The Cetan Advantage is what sets us apart from other lenders. It provides borrowers superior lending experiences. As a result, our investors are well positioned to realize a positive investing experience as well. The Cetan Advantage embodies the following values:
- Expertise
- Partnership
- Efficiency
- Flexibility
- Integrity
How Are Returns Calculated and Earnings Distributed to Investors?
Both Funds fully distribute net income to all investors on a pro-rata basis quarterly. All investors are treated equally as we do not have a preferred return, classes of shares, or any other preferential treatment.
We close the accounting quarterly, derive the net income, and then our fund management software calculates the distributions to generate investor statements. Dividends may be withdrawn or reinvested in additional shares. Generally, it takes two to three weeks to close a quarter and distribute the earnings to investors.
Are Your Financial Statements Audited?
Yes, our financial statements are audited annually by a qualified CPA firm that specializes in private equity funds that include real estate debt funds and are posted for existing investors as well as available for interested investors.
What Type of Income Will My Earnings Be Considered?
Equity investors earn ordinary income and will receive a K-1 schedule for their tax returns. For IRA investors, Unrelated Business Taxable Income is generated but is limited to the amount of income that is generated from leverage; hence, it is a very small percent.
None of the information herein is to be construed as a solicitation, recommendation or offer to buy or sell any security, financial product, or instrument. Any projections or targets are aspirational only, are not guaranteed, and do not reflect past or current performance. Any report of past performance is no guarantee of any future performance. As with any investment, an investment in the Company is subject to risks, some of which could be substantial. No investment should be made in the Company by any investor who cannot afford to lose their entire investment. There are also restrictions on re-sale of Company securities and no investment should be made by any investor who cannot afford to hold the investment in the Company for a long period of time. This investment is only allowed and suitable for certain kinds of investors, who must have their investment status verified and confirmed in writing. No investment may be made, and no investment will be accepted unless the Company has received and approved the required written verification of each investor’s status.