How To Become A Private Lender

Becoming a Private Lender is one of the easiest ways to dip your toe into real estate investing. It can be fairly short term with high returns so you can experience one deal before making a bigger commitment and you have the security of a note and mortgage on the property you are lending funds on.

What is a Private Money Lender? Private Money Lending is when a private individual desires to deploy their capital as a loan on another asset, typically for another investor who buys investment property to flip or hold. The funding is secured by real estate just like a bank loan and the “note” dictates the interest rate and length of time the note will last before it needs to be paid back, which is referred to as a balloon payment when the note is due. The benefit of private lending is attractive interest rates secured by real estate with options for short or long term loans. Many investors get involved in private money loans to diversify their investing portfolio.

Here are the highlights:

  1. Returns as high as 6-10%
  2. Note terms of 12 months even though many times you can be in and out of a deal in as little as 4 months
  3. Minimum Investment of $50K
  4. Resources of funds acceptable are cash, entities, retirement accounts, whole life insurance polices and more!

Advantages to Private Money Lending:

  • High Returns: Private Money Lending can return up to 10% (annualized).
  • Security: Private Money Lending means you are the “bank” and you hold a note and mortgage (drafted by an attorney) just like any bank has to secure their investments when you buy a property.
  • Liquidity: Private Money Lenders commit to a short 12 months for most investments and many times the investment cashes out much sooner.
  • Diversity: Many investors who already invest in funds and syndications like the ability to diversify by being a private money lender.
  • Redeployment: With Freedom Capital Investments, as soon as you receive your return, we are preparing the next investment opportunity in the case you want to redeploy your funds.

Disadvantages to Private Money Lending:

  • Short Term Investing: Sometimes investments may only last 4 months, 6 months, etc.. meaning your money stops working for you when the money is returned with interest. You need to redeploy the funds in order to start earning interest again.
  • Lower Effective Returns: Due to lending on a per deal basis, you will potentially do 1-3 deals in any given year meaning you invest your funds and then receive your principle and interest once the property is sold. You are then offered another opportunity to do it again. For all the days where the funds are back in your hands, your money is not earning interest until you redeploy it.

If you are looking to protect your capital, enjoy passive income, and grow your wealth over time – you are in the right place. We look forward to helping you build passive income so you can live life on your own terms.

Freedom Capital Investments is free and open to everyone. Join thousands of people just like you that are discovering the amazing benefits of investing passively in real estate.