20 Years Old, Have About $250K, Bought First Rental This Year — Looking at Hard Money

[Nicholas Stevenson]

Hey everyone,

I'm 20 years old and have about $250,000 that I'm looking to deploy.
Earlier this year, I bought my first rental property — a condo for $175,000— and now I'm looking at getting a loan against it to free up even more capital.

I'm seriously considering starting a hard money/private lending business.

I’m hoping to mainly fund flippers, investors, and small bridge loans at low LTV's (around 65-70% of ARV).
Right now, I’m based in UTah, but I’m open to ideas about nearby markets too.

A few questions I would love advice on:

•  Is $250K enough to get started lending in today’s market, or should I look into pooling capital?
•  Should I fund just purchases (and have the borrower cover rehab), or fund both purchase and rehab?
• How do you structure your deals safely (LTV, liens, insurance, escrows)?
•  Where is the best place to source my first borrowers (wholesalers, agents, flippers directly)?
•  Any rookie mistakes you see new lenders making that I should avoid?

I really want to do this the right way — my goal is to protect my principal while building a solid track record over time.

If any experienced lenders or investors have advice, or if you have resources I should dive into, I'd greatly appreciate it.

Thanks in advance — excited to be part of this community and keep learning!

[Jay Hinrichs]

I would go to work or mentor with a HML company to start to learn the ropes.

250k is a nice investment amount for a retirement fund .. but not nearly enough to really be in the business. And make a living.

In my mind if your going to do this you need to figure out how your going to make 200k or more per year as you grow the business.

Lets say you are going to make 2 points on deals work it backwards from your capital needs.

Now some loans will pay off prior to a 12 month term so you may average 3 points a year on funds out.. then you are going to have to give majority say 90% of the interest income to your investors or bank  for access to capital.  so you may peel off 1% more on funds out.

2 mil to me is minimum in lendable cash to really get going in the bizz and have it as your primary income source.. 5 to 10 mil for a solo lender that you 100% control will make you a nice living. takes some years to gear up for it but its a great goal .