Can I become a private money lender?

[Matthew Roberts]

I'm brand new to REI. Would someone's first splash in REI as a private money lender be a bad idea? If I could find someone who could use my cash better than I could, what would be a pitfall of pushing this strategy? If I could get 8-12% per month in this market (San Diego) and save I would think its a safer play. Anyone have thoughts or opinions on this?

[Ann Bellamy]

Well, first, you won't get 8-12% per month, you'll get that as an annual rate.  As a beginner you don't know how to evaluate a deal.  When you lend, you give up control of a deal that you probably don't have a full grasp of in the first place, and your remedies when things go bad are usually found in the court system, which is slow and expensive at best.  

You then have a whole other set of laws and rules to learn and comply with, both lending and securities laws.  One of those "You don't know what you don't know" situations.  

This thread has some information, as well as links to more threads, spend some time reading.

When I started lending, I made tons of mistakes, and we paid dearly for them.  The field of private lending is not forgiving.