Becoming the Bank: A Guide for New Private Lenders

Becoming the Bank: A Guide for New Private Lenders

Imagine earning steady, predictable returns without the headaches of owning or managing property. That’s the beauty of private lending—you step into the role of the bank, financing real estate deals for investors while earning interest on your money, all secured by tangible real estate.

What Is Private Lending?
Private lending is when an individual provides funds to a real estate investor, typically for purchasing, rehabbing, or refinancing a property. Instead of earning minimal interest in a savings account, you can earn 6% to 12% annually, depending on the deal, with your investment protected by a mortgage or deed of trust.

How Do You Get Started?
The first step is understanding that you’re in control. As the lender, you set the terms—interest rate, repayment schedule, and length of the loan. Always work with experienced real estate investors who have a clear plan and proven track record. Ask questions about the property’s value, their exit strategy, and their experience to ensure the deal is sound.

Why Is It Secure?
Unlike unsecured investments, your money is tied to real estate collateral. If the borrower defaults, you have the right to foreclose and recoup your investment. This security, combined with the relatively short terms of most loans, makes private lending attractive for those seeking a low-maintenance, income-producing asset.

Tips for Success
Start with smaller deals to build confidence. Use a title company or attorney to handle all documentation, including a promissory note and recorded mortgage. It’s also wise to involve a professional to verify the property’s value.

Conclusion
Becoming the bank through private lending allows you to generate consistent passive income while minimizing effort. With the right deals and protections in place, you can grow your wealth securely—without ever swinging a hammer.

Would you like to know more about investing passively from your IRA?   Contact Alex at [email protected] or call 501-580-2598

What we’re up to…

Why a Will Isn’t Always Enough When Passing Down Property

Many people are surprised to learn that even if a loved one leaves behind a will, the property still has to go through probate before it can be sold or transferred to the heirs. Probate can be a lengthy, costly, and frustrating process—especially when time is of the essence.

This past week, we’ve been working with a family to purchase a home that was just days away from being sold at a foreclosure auction. To postpone the sale, we had to navigate a maze of probate attorneys, title companies, and countless phone calls with the lender. After a lot of effort, we were able to delay the foreclosure for 30 days—but it wasn’t easy, and we’re still working through the process.

One important takeaway from this experience: if you own real estate and want to pass it on to your heirs, relying on a will alone may not be the best option. Instead, consider using a beneficiary deed or other estate planning tools that allow property to transfer automatically upon your passing—without going through probate.

These small steps can save your loved ones time, money, and stress during an already difficult time.

Would you like to be a part of helping folks in foreclosure while growing your retirement nest egg? Contact Alex at [email protected] or call 501-580-2598