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Common Mistakes New Private Lenders Make & How to Avoid Them

April 9, 2021

I’ve been asked quite a few times over the last year to review “deals” new(ish) private money investors would like my input on as a seasoned private lender. Many have also come to me after the fact to evaluate options to problem solve after existing loans have gone sideways.

I thought I would recap some of the similar trappings found in each situation I reviewed to serve as a valuable lesson of what not to do when entertaining private loans in the future. Absolutely none of the investors who came to me were stupid or unaware. I think this is important to say given these people did what most decent humans do by trusting in the good intentions of others. Sadly, there are a lot of disappointing characters in real estate investing. Most aren’t crooks, per se, but many aren’t equipped to execute on their original plans. Excellent sales, poor execution.

At any rate, I hope this helps some of you and would appreciate anyone else weighing in on the subject so others can glean insights on their own journey to building passive wealth through private lending. The more we can share lessons learned with each other, the safer the journey.