Private Lending Guide
To lend private money is to lend your own capital to a real estate investor, secured by the property they’re buying, and to earn interest until the loan is repaid. Lend Private Money has made these loans to investors since 2003. This guide explains how lending private money works, the risks, and the two ways to start: lending directly, or investing in notes.
A private money lender is an individual or company, not a bank, that lends to real estate investors. The borrower is usually renovating, building or holding an investment property. The loan is short (often 6–18 months for a flip) or long (30 years for a rental), and it’s secured by a lien on the property. If the borrower doesn’t repay, the lender can foreclose and recover the loan from the property.
“Hard money” and “private money” overlap. Both are asset-based loans to investors. People usually say hard money for a professional lender and private money for an individual lending their own funds. Read more in hard money vs. private money.
Lending rules, licensing and tax treatment vary by state. Talk to a real estate attorney and a CPA before you lend.
Good private money lenders manage these risks with conservative LTVs, first liens, title insurance and careful borrower vetting.
| Lend directly | Invest in Lend Private Money Notes | |
|---|---|---|
| Finding borrowers | You | We originate the loans |
| Underwriting | You | Our underwriting team |
| Documents and servicing | You (plus your attorney) | Handled for you |
| Diversification | One loan at a time | Notes backed by our loan activity |
| Minimum and terms | You decide | See the Notes details |
If you’d rather earn from private lending without sourcing and servicing loans yourself, see real estate note investing with Lend Private Money.
Becoming a hard money lender follows the same steps, done at scale and as a business: forming a company, raising or pooling capital, building underwriting and servicing processes, and getting any state licences required for the loans you make. Most individuals start by lending privately or investing in notes before building a lending business.
FAQs
Yes. Individuals can make private loans secured by real estate, but lending laws and licensing requirements vary by state, so speak with a real estate attorney first.
Mainly from the interest the borrower pays, and often from origination points charged at closing.
Every loan carries risk, including default and loss of principal. Lenders reduce risk with first liens, conservative loan-to-value ratios, title insurance and personal guarantees.
Lending directly usually means funding a whole loan yourself. Investing in a lender’s notes program can let you take part with less capital and no loan servicing.
Ready to put your capital to work? Explore Lend Private Money Notes or call 407-401-8790.
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