Big Law Capitalist
Big Law Capitalist
Sep 21, 2022
E08: Becoming the Bank and Earning Substantial Passive Income as a Private Lender
Play • 30 min

If you have cash or assets just sitting on the sidelines not working hard for you, you need to consider private lending as a strategy. As a private lender, you can leverage your assets, be it cash, property, or relationships, to invest and grow your passive income and wealth. You can finally make the interest rates work for you by earning above-average interest rates without lifting a finger. With private lending, you become the bank.

In this episode, I dive into the strategy of private lending, share my own experience as a borrower and how you can earn secure, profitable, and passive income as a private lender, and touch on some of the things you’ll need to watch out for when thinking about private lending.

Here are some power takeaways from today’s conversation:

  • Be the bank as a private lender.
  • Receive above-average returns on your passive income.
  • Protect your investment with collateral.
  • Leverage your untapped assets to create multiple options you can use to invest.
  • Leverage your relationships.

Episode Highlights:

[05:24] What is a Private Lender

A private lender is a person who lends money to qualified real estate operators for an above-average rate of return. Make the rules and be the bank when you lend your money. This completely passive income can be structured to be tax-advantaged.

[09:09] Private Lending as Passive Income

Jeremy shares the story of how one of his friends put his assets to good use with private lending. His friend took out a home equity line of credit (HELOC) and used what he borrowed to grow his wealth and passive income. He was able to pay the debt service payments with cash earned from his private loan and reinvest the excess cash flow from his investment.

[14:20] The Advantages of Private Lending

Private lending can be a great strategy to add to your portfolio. Enjoy its rewards without having to lift a finger. Be smart and savvy about how you invest your money. Here are a few reasons why it’s a great opportunity for you: 1) Completely passive income; 2) Above average returns, 3) Secure your investment with collateral; 4) Price your risk by earning higher rates of return on riskier investments; 5) Short-term investment; and 6) Structure it the way you want.

[20:02] Private Lending Options For Anyone

With private lending, you can put your money to work. However, it’s not just for those with tons of cash. Leverage your assets and invest them at a higher interest rate. From properties to a Self-Directed IRA, you have a lot of options to invest with a private lending strategy.

[25:02] What to Look Out For

If you want to put your money to work with private lending, make sure you have proper legal documentation. Talk to your attorney and keep your investment protected with a security instrument and promissory note. Work with a qualified real estate operator who knows what they’re doing and is good at what they do.

Notable Quotes:  

[5:53] “You’re the banker and what’s cool about it is you make the rules.”

[14:24] “The reason it’s such a cool strategy is obviously the passive nature of it. But there’s also another component. The security of it.”

[20:25] “You’re burning money at this point. Inflation is tearing that money apart. Put that to work.”

[28:42] “If you want to add substantial passive income, you have to start thinking about these sort of options.”

Resources Mentioned:

NuHomes Capital Management

Reach out to Jeremy at LinkedIn & Instagram

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