How to Fund Your First Private Real Estate Loan

How to Fund Your First Private Real Estate Loan

Private lending can be a powerful way to earn passive income, especially when your funds are secured by real estate. But if you're new to this space, one of the biggest questions is: How do I actually fund a private real estate loan? Here’s a simple, step-by-step guide to get you started.

1. Determine Your Available Capital

Start by assessing how much you’re ready to invest. This could be cash savings, a line of credit, or funds from a Self-Directed IRA (SDIRA). Many first-time private lenders use their retirement accounts to earn tax-advantaged returns while their money is backed by real property.

2. Find a Trustworthy Borrower

You can work with real estate investors (like us) who are purchasing properties through creative finance strategies such as subject-to, lease options, or fix-and-flips. The borrower should provide a clear plan, show how they’ll repay the loan, and offer adequate collateral.

3. Agree on Terms

Decide on:

• Loan amount (e.g., $30,000)

• Interest rate (e.g., 9%–12%)

• Term length (e.g., 12–60 months)

• Payment structure (monthly interest-only or balloon)

These terms should be documented in a promissory note and backed by a recorded mortgage or deed of trust.

4. Use a Title Company or Attorney

To protect yourself, always use a neutral third party to handle documentation and funds. They’ll record the mortgage, issue a lender’s title policy, and ensure you’re listed as an additional insured on the property insurance.

5. Get Paid

Once the loan is funded and documents recorded, you’ll begin receiving monthly payments—just like a bank.

Private lending is a simple and secure way to grow your wealth while helping others achieve homeownership. Ready to become the bank? Let's talk.

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…

Taking the Leap: Starting My Real Estate Agent Journey

After a lot of thought and back-and-forth, I finally decided to take the next step and begin my real estate agent education. A broker friend recommended an online platform called The CE Shop, so I took the plunge and signed up.

Let me tell you—it’s no walk in the park.

With my years of hands-on experience in real estate, I figured this would be a smooth ride. But to my surprise, it’s been much more challenging than I expected. The coursework is dense, and I feel like I’ve enrolled in law school with all the legal terms and contracts I’m learning!

That said, I’m reminded that anything worth doing usually isn’t easy. I know this effort will open more doors and give me even more tools to serve my clients and community at a higher level.

I’ll keep you posted on how things go. Wish me luck—I might need it!

Would you like to know more about how to grow your retirement nest egg? Contact Alex at [email protected] or call 501-580-2598