Investing With Private Money Lending
What is Private Lending?
Private lending is essentially non-bank lending. In a nutshell, it is when a private individual loans money to a borrower.
In the case of private lending in real estate, the money you lend is secured by collateral. In other words, your investment is backed by the actual property you are loaning on. That is definitely a confidence booster!
In my experience, the vast majority of private lending is done between passive investors and real estate investors. This is an excellent opportunity to be involved in real estate investing without having to spend a ton of time managing your investments.
Compared to other forms of real estate investing, like owning rental properties, private lending is fairly low maintenance and ‘hands-off’ once the deal has been set up. You can receive double-digit returns on your funds, and you can repeatedly loan the same funds over and over for a consistent income stream, working with your favorite and trusted investor.
Coppertop Home Solutions vets every deal carefully and thoughtfully. We analyze our projects using our extensive market knowledge. We present documentation with highly analytical software, including Purchase Price, Repair Estimate, Market Value after renovations are complete, and Profit based on these numbers. That allows you, the lender, to make an informed decision.
All lending opportunities are documented with legal contracts and the statutory mortgage is recorded with local public records for your protection.
If done well, private lending can be a great way to add more passive monthly income to your portfolio.
Reasons to Consider Lending Private Money:
In my experience, here are some of the main reasons people get into private money lending:
- Having a large disposable income from your employment or a business.
- Actively building your retirement account
- Already having built a large retirement account such as a self-directed IRA or 401(k)
- To diversify your investment portfolio (out of stocks and shares, mostly)
- Needing more passive income – for example a retiree
- To invest in real estate, but you do not want to buy/rehab/manage/sell properties.
- Concern about the volatility in financial markets, and the next recession
- Inheritance of a lump sum
- Specifically needing monthly income from your investments to cover living costs.
- Actively generate income from your home equity just sitting there doing nothing but collecting dust!! Yes, you can invest from your home equity, rinse and repeat for a great income stream!
If any of these apply to you, you might want to consider an investment in private lending. Especially if you want to build a well-diversified portfolio that is not dependent on the stock market, or you need dependable, passive monthly income.
