Private Lending 101: Maximize Your Assets for Investment Growth

Streamlined Funding Strategies for Private Loans

5 ways to fund loans, and 5 ways to find borrowers.

1. Self-Directed IRA
   • A self-directed IRA allows you to invest in nontraditional assets, including private loans. You can lend money secured by real estate or other collateral, or even make unsecured personal loans based on the borrower's creditworthiness. This method offers tax-advantaged interest and portfolio diversification. I use Horizon Trust and they’re not horrible but I don’t find them to be some superior option or amazing experience either. I did a youtube video talking about my second time funding a loan with them.
2. Bank Savings
   • Use idle cash in your bank account to fund private loans. This approach provides liquidity and flexibility, allowing you to quickly seize investment opportunities.
3. HELOC
   • If you own property, a HELOC allows you to borrow against the equity in your home. This can be a cost-effective way to access funds for private lending, as HELOCs often have lower interest rates compared to other types of loans.
4. Personal Credit
   • Consider taking out a business loan, line of credit, or my favorite, 0% interest credit cards to fund private loans. This method provides flexibility, earns points, and can reduce liability
5. Friends and Family
   • Borrowing from friends and family can be a viable option for funding private loans. Ensure that all terms are clearly documented to avoid misunderstandings. If you go outside of the friends and family realm, beware of SEC regulations requiring you to establish a regulated fund.

Discovering Private Investment Opportunities

1. Real Estate Investment Blogs
   • Engage with platforms like BiggerPockets for community-driven insights and tools that facilitate private lending connections.
2. Mentorships
   • These can be paid or personal relationships built. Gain valuable knowledge and network access through mentorships with seasoned private lenders.
3. Investor Facebook Groups
   • Connect with local investors via Facebook groups to uncover leads and share experiences in real estate investment. Keyword search the markets you want to lend with and add real estate terms such as “memphis real estate investors” or “memphis off-market properties”.
4. Investment Clubs
   • Join REIAs or investment clubs to network, learn, and find private lending opportunities through organized events and sessions.
5. Chamber of Commerce
   • Expand your professional network at Chamber of Commerce events, opening doors to new investment ventures and local entrepreneurs to build potential investment relationships with.