Private money loans, often called "hard money" are big business lately. Until the big banks got in the act, these were the real estate market's source for subprime mortgages. Individuals or groups have long been willing to take a chance on borrowers with poor credit or unusual financing needs in exchange for a high rate on investment. Now even these lenders are becoming more discriminating, because the properties securing these loans often have declining equity. A good appraiser is essential.
A "hard money" loan broker that I know is so overwhelmed with choices that he has begun to refuse small loans that pay limited fees. He is trying to juggle more than two dozen loans at a time for his investors.
Realtors depend on these high interest, short term loans to help homeowners who want to buy a new house before they've sold their old one...a "bridge" loan.
There is some risk involved, but where else can an investor see a 6-10% return on his money lately? Certainly not in a bank!
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