Private lending offers the opportunity for passive, high-yield income—but only when the deal is properly structured. If you’re lending your hard-earned money to fund a real estate investment, it’s crucial to protect yourself from unnecessary risk. Here’s how to structure a private loan for maximum security.

A promissory note is the legal document that spells out the loan terms: amount, interest rate, payment schedule, due date, and any default penalties. This note serves as your enforceable contract and should always be signed by the borrower.

The promissory note should be secured by a mortgage or deed of trust recorded against the property. This legally ties the loan to the property and gives you the right to foreclose if the borrower defaults.

Make sure the property has active hazard insurance and that you’re named as an additional insured or loss payee. This protects you if there’s fire, flood, or other damage to the property.

To protect your investment, have all documents prepared and recorded by a professional—either a real estate attorney or title company. They’ll handle lien recording, disbursement of funds, and provide title insurance if needed.

Your borrower should clearly explain how they intend to repay the loan—whether through a sale, refinance, or long-term rental income. A well-defined exit strategy is a sign of a well-prepared investor.

Conclusion:
Private lending can be a safe and rewarding way to grow wealth when structured correctly. With legal safeguards and proper documentation, you become the bank—with all the benefits and minimal risk.

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

Working remotely from abroad has its ups and downs. This month, I’ve been in Mexico spending time with my family while continuing to manage my business from afar.

The upside? Thanks to technology, I’m still able to handle most of the work I’d normally be doing in Little Rock—calls, contracts, follow-ups, and more.

The downside? I miss being able to meet clients face-to-face and go door-knocking, which—although tough—is one of the most effective ways I connect with people and make deals happen.

Still, I’m grateful for the flexibility and the chance to stay productive while being with family.

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