Private Lending vs Rental Property vs ?

[Raj G.]

Hi, Just wondering if somebody has $500K cash, what are best investment ideas.

1. Private lending assuming return of 12%.

2. buy some rental property : 15 years Loan with 20% down payment, I can buy 3 two family homes each cost $500k to $600k, each home will give rental income about $4000 to $5000 per month, it will cover at least all expense like tax+Mortgage+some repairs etc and once loan is done you got property, there may be or may not be any cash flow, but you have property loan free in 15 years.

or something else

I Know lending is pure passive with minimum efforts while rental property has some pain, here my comparison comparsion on RoI(return on Investment), in rental property what is expected % return as compared to lending.

I tried to find similar post, but couldn't find, if you know other similar post please paste link...Thanks

[Frank Hinck]

@Raj G.

Private Lending I would not say is passive, it takes experience & intimate knowledge of flipping to evaluate deals, knowing the flippers personally, and being able to act in case of foreclosure/default. 12% is a good return if you’re lending directly to a flipper.

If the long term goal is growing a rental portfolio - assuming you could figure out doing it correctly, loan $500k for 1 year, make $50k and put that down as a 20% down payment on a $250k house, keep doing that using the original $500k to throw off income and keep reinvesting it. After 3 mortgages (plus your 1), re-fi them into a commercial loan or sell all, buy multifamily, rinse/repeat. That would be the overall ideal scenario, I’m sure others will have varying options on it - that’s why we’re here on BP discussing.

@Jay Hinrichs @Odie Ayaga chime in on this as well