How to Get Started as a Private Lender in Real Estate

How to Get Started as a Private Lender in Real Estate

If you’re looking for a way to earn passive income backed by real estate—without becoming a landlord—private lending might be the perfect strategy for you. As a private lender, you act as the bank, loaning money to real estate investors and earning interest in return. The best part? Your investment is typically secured by the property itself, providing both income and security.

Step 1: Understand the Basics
Private lending involves funding real estate deals—often short-term—in exchange for monthly interest payments. These loans are typically secured by a mortgage or deed of trust. You’re not buying the property; you’re financing it.

Step 2: Determine Your Capital Source
Many private lenders use personal savings, a self-directed IRA, or capital sitting in underperforming accounts like CDs. It's important to know how much you can invest and how liquid you need your money to be.

Step 3: Learn to Analyze Deals
Work with experienced borrowers or deal sponsors who can present you with the details of a project, including the purchase price, rehab costs, after-repair value (ARV), and exit strategy. Pay close attention to the loan-to-value (LTV) ratio—it’s one of the key indicators of safety.

Step 4: Protect Your Investment
Make sure your loan is secured by real estate through a formal promissory note and recorded mortgage or deed of trust. Always work with a title company or attorney to ensure proper documentation, title insurance, and disbursement of funds.

Step 5: Start Small, Grow Confidently
You don’t have to fund a million-dollar project on day one. Many private lenders start small and build confidence over time, reinvesting their returns into larger opportunities.

Private lending is a powerful way to generate consistent income while helping real estate deals come to life—all without lifting 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…

Financial education is one of my passions! I love to teach others what I’ve learned along the way: real estate, private lending, self-directed IRA’s,

Sometimes people complain about paying too many taxes. Did you know that IRAs allow us to grow our retirement account TAX FREE? This is one of the many things I love to teach others about.

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