Private Money Lenders: 11 Top Tips from Private Lender Playbook

If you could become the bank, would you?

Once we earn, we will likely find ways to invest that align with our values. People who build wealth eventually become net lenders. Private money lenders have the option to select which investments they participate in.

Private Lender Playbook by Brant Phillps discusses passively investing in real estate as a money lender.

1. If you could become the bank, would you?

Banks get to choose who they lend to and the terms. Banks make their money off of interest.

Real estate investing comes in many forms, like REITS, real estate stocks, and rental properties.

Have you ever considered investing in real estate?

It’s my favorite investment. We all need a place to live.

Private mortgage lending is not something you need a license or a degree to do. The first step is doing your research to understand what the investment vehicle is and how other people are currently doing it.

Think about the true control you have when investing in stocks (just a paper or digital certificate of ownership) but you can’t see what you are invested in.

I am a part of the crypto movement and the returns have been… interesting. Passively investing in real estate may not generate this same return but the risks are also different.

When you buy crypto you receive no certificate or anything physical. When you invest in real estate you may receive documents like the note and deed of trust.

So what is the end game… Net money lender. Maybe it’s not for everyone.

2. Why private money lending will always be around

Real estate requires a funding source or several funding sources. Real estate investors have a variety of government loan options, banks, their money, or other people’s money. Private money lenders help fuel growth in our economy way beyond real estate and small businesses.

Real estate and other businesses will always need CAPITAL as one of their most vital resources.

“The more you learn the more you earn.” — Frank Clark

I am not an active financial advisor and the purpose of this content is to open your mind to something that is available if you have never heard of it before. Use your due diligence and research.

Successful investing is about managing risk, not avoiding it. Private money lenders become great at evaluating risks and finding the best-fit situations for their investment goals and risk tolerance. Make sure you are not convincing yourself that the risk doesn’t exist.

Areas will continue to be developed. No more land can be created. The world population growth means people need somewhere to live.

3. What do I need to get started?

Your journey starts with education and understanding all (or as many as you can) of the available investment vehicles you have. And then learn about real estate and its different areas. Build capital, the accumulation phase. Save money. Learn more about personal finance with a book like The Richest Man in Babylon, read the post here.

Next, you will need to begin saving money or cultivating your ability to fundraise by using Other People’s Money (OPM).

The relationships. A good base of How to Win Friends by Dale Carnegie and Dig Your Well Before You’re Thirsty by Harvey McKay would be helpful here.

Be the bank. Control the terms of your money and the impact of your money. There are some things we can control with our money. Why not buy the boardwalk like in Monopoly?

Building a superstar tax team would be an eventual goal. Learn more about real estate and taxes. Savings.

Connections to other people in your network who have saved. And they have an interest in investing. Like-minded people to connect with because not everyone is on the investing wave or not everyone is comfortable taking risks.

4. Educate yourself and join a REIA or a Real Estate investment group

Education is the key to growing your wealth journey. Getting out of your comfort zone is also important. Getting to know all of the investment vehicles available to you is key. To learn from their collective failures.

A way to expedite your learning curve is to find a mentorship or a paid coach but beware because there are many high-dollar real estate programs in existence and not all of them are worth it.

Real estate groups are common places to learn and ask questions to people who are already doing it successfully. Great place to ask “dumb” questions and to build connections, some will be lifelong friends possibly.

Only so much you can learn from YouTube and books, you will likely need to associate and connect with people in your neighborhood already doing real estate successfully. You can use a site like Meetup to find real estate events and mixers.

5. Networking & relationships

It’s not about what you know, it’s about who you know. It helps to have friends in the business of real estate.

How do you find the right people to invest in?

Keep meeting people who are in the right location and in the right state of mind. Not everyone will fit this category.

I met a lot of real estate investors in a short period of about 2 years going to meetups darn near daily. I found this through my previous job and going to events daily. And learning more about their operation.

Who you know and what they think about you helps a lot in real estate because it is a connection based business.

Local real estate investors and your REIA will connect you with contractors, builders, landscapers, and other professionals related to real estate.

Nurture relationships. Show your value to them, not just talk.

6. Ideally first lien

The ideal scenario for you us to lend in first lies. The major risks if you are not the first lien is the risk losing your money. But if you don’t have much capital you may have to start off in a second or third lien place but Brant highly discourages it. Private money lenders operate on calculated risks.

I started in the third lien. I would not advise from a risk perspective although I did not have any issues because I was working with experienced real estate investors and no major issues on the properties they allowed me to lend on.

7. Real estate CPA

Networking with the right people is mission-critical. How to connect with a CPA that specializes in real estate investments, not just a generic CPA.

Your REIA should have a listing or repository of active members/vendors. I think the best way is to talk to your real estate investors because they need this person to run a successful business. Private money lenders build a team of smart people around them to help them grow their business and identify potential issues.

8. Investing in your community

I like real estate investing because you can do so “in your backyard.”


There are several different vehicles that make real estate. It is usually a physical asset (typically). Can watch the progress. Help the neighbors on that street.

This is a reaffirming feeling especially if you grew up in a certain community.

9. Self-directing your IRAs

Individual retirement account and Quest Trust, a company that allows you to self-direct your IRA and invest it in assets like real estate. Some of our jobs set up IRAs or 401ks for us. If not, you may have to open one yourself. In the past, I have used Vanguard for this.

Private money lenders look to IRAs for certain benefits that cannot be experienced with your taxable accounts.

Working at Quest Trust taught me a few great things. Partnering with your IRA or other people’s IRAs.

Are Roth IRAs beneficial?

It depends on who you are and how educated you are (at least about income creation and growth) and how active you want to be in the investment process.

10. Hard money

If you learn what a deal is you can potentially find one today in your current market. And hard money lenders have specifications that are not similar to a conventional bank loan. Sometimes private money lenders are not the best option so investors seek alternatives like hard money. It works, is fast, and is based on the value of the asset not necessarily your borrow history.

The interest is high and points. Not best for long-term real estate investors.

11. What about Partnering?

Know your short-term and long-term financial goals. Based on your age and risk tolerance as well as if you have a family/dependents. Private money lenders are always expanding and nurturing their network because you never know who you may team up with for a deal in the future. Don’t burn any bridges if you can help it.

If you only work in terms of the money you have or save then you will never have much money.

If you master the art of fundraising for investment then you can have OPM = other people’s money.

What is your plan for wealth?

Does it involve real estate?

Does it involve lending money to other businesses?

— — — — —

What I think about the book and the lifestyle. Watching videos and reading more about others who are doing it.

Where I will finish

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