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5 Questions to Ask Yourself Before Becoming a Private Lender

August 17, 2021

Lately, I’ve experienced a fair amount of interest (no pun intended) in private note investing, where you lend out your money to a real estate investor to passively earn interest income. It seems like many investors are sitting on a pile of cash from a recent flip or a work bonus, and are curious about diversifying their portfolio beyond stocks and other traditional investment strategies. I thought I would provide a little more information for those interested and contemplating whether investing in real estate-backed loans is right for you.

There are a ton of us hard money and private money lenders out there willing to take your money and provide you with solid rates of return in exchange. Most importantly, you should meet with potential lenders in person, if possible, about placing your money with them.

There are some key considerations you’ll need to ponder beforehand. Hopefully, this can be just a starting point to answer some questions some of you might have.