Gustan Cho The Mortgage Expert
September 6, 2021 – 4 min read
This Article Is About How To Become A Private Money Lender For Real Estate Investors
To find a good opportunity to lend.
What constitutes a good opportunity to lend?
There are a couple of things you as a private money lender can do to be sure you’re getting the best possible opportunity to lend on. This takes a few factors that are controllable and then mitigating the rest that may not be as much. The idea is to make sure that you have the best possible scenario available to earn interest income.
In this article (skip to…)
- First Step On How To Become A Private Money Lender Is To Make Sure To Have Finances In Order
- Next, Make Sure You Have The Right Financial Tool To Make It Work.
- Now Find Your Risk Tolerance
- How To Become A Private Money Lender Is To Make Your Choice And Get To It
- Risk And Reward In Of Private Money Lending
- Knowing Where Your Money Is Invested
First Step On How To Become A Private Money Lender
Is To Make Sure To Have Finances In Order
Before you can begin to take on external interest-only income investments you really need to be sure you have enough room to make this type of investment. As much as this is a rewarding investment tool to get into, it does have its risks. In doing your own due diligence at home first, you have the greatest opportunity to maximize your investment.
In this article, we will discuss the pros and cons, and risk factors involved in becoming a private money lender.
That said if where the money is stored, withdrawn, and deposited to or from is not “protected, you stand to lose as much as you gain; in some cases, even more. The best start on How To Become A Private Money Lender is to find out what financial tool is best to store your hard-earned money. It may make sense to use a Money Market Account. Or as is the case with many of our investors, a self-directed IRA is best. Whatever your choice you will want the right professional to help guide you through that process.
If you’re not sure who to talk to about those things we have a few pros we can send you to that are licensed and vetted by
Gustan Cho Associates.
Next, Make Sure You Have The Right Financial Tool To Make It Work
There are a lot of ways you can make investments and professionals that are more than willing to take control of your money and put it to good use.
That said if where the money is stored, withdrawn, and deposited to or from is not “protected, you stand to lose as much as you gain; in some cases, even more. The best start on How To Become A Private Money Lender is to find out what financial tool is best to store your hard-earned money. It may make sense to use a Money Market Account. Or as is the case with many of our investors, a self-directed IRA is best. Whatever your choice you will want the right professional to help guide you through that process.
If you’re not sure who to talk to about those things we have a few pros we can send you to that are licensed and vetted by Gustan Cho Associates.
Now Find Your Risk Tolerance
This is one of those things where you sit down and write out a list of investments that you can think of in the private money lending realm and place a checkmark next to the ones that you actually feel good about.
Let’s say you look t Single Family Residences, and you think it is a good idea. You then place a check next to it. That means when someone brings you a deal like that, you will take the time to go through it, investigate it to your best ability, or through your broker’s intel gathering.
Then you make a decision based on what facts have been gathered and how much risk you are willing to take.
How To Become A Private Money Lender Is To Make Your Choice And Get To It
Now that you’ve figured out what you’re willing to risk, what you’re going to use to store and invest money with, and what you’re willing to invest in, (homes, buildings, etc.) you can begin to look at opportunities that can earn you a greater return.
Making sure that you have the right investment in your portfolio isn’t rocket science if you have the right “team” in place. Gustan Cho Associates Mortgage Group has the experience and the know-how to vet and create the right opportunity for both borrowers and investors to earn the best income on both sides of the equation.
If you’d like to learn how you can do more with your investments or need a referral to a professional that can help you find the right tool for investing, give us a call at Gustan Cho Associates at 262-716-8151 or text us for a faster response. Or email us at [email protected].
Risks And Rewards In Of Private Money Lending
It’s the Most Passive Form of Real Estate Investment Available:
- One of the greatest benefits of becoming a private lender is private money lending is the most passive form of real estate investment
- The private money investor does not have to purchase a property, do any work to the property, does not have to collect rents, perform evictions, do maintenance, pull building repairs, or other tasks of being a landlord
- The investor will just lend to the real estate investor who will perform all of the tasks above
Average private money lenders can make north of 10.5% annually.
Knowing Where Your Money Is Invested
As a private money lender, you will know exactly where your money is invested. Unlike the stock market where you have no control, you have control over your investments. Gustan Cho, the National Managing Director at Gustan Cho Associates and veteran real estate investor and private money lender says the following:
“When you opt to invest in private money lending for real estate, you have the peace of mind of knowing that your investment is secure with real property. There’s an actual asset that backs up your money. As such, there’s very little chance that a real estate developer could default on the investment making your investment very secure, with extremely low-risk. There are substantial gains to be made by being a private money lender for real estate investments, and we’d love to talk with you about the possibilities. With just a minimum $50,000 investment, you could be looking at an annual interest return of 10.5% over a 24-month period, with up to 21% IRR. It’s 100% passive income, with one of the highest cash flows, extremely safe, and backed by real property. What could be better than that?” – Guastan Cho