How to become a private money lender: you don’t need to be a millionaire

Your wealth is not measured by your possessions but by the money you bring in each month. To increase this amount, you need to get involved in a way to invest your money. If you are looking for an investment opportunity that differs from traditional stocks and bonds, you may be interested in learning how to become a private money lender. Private money loans are often made to real estate investors, so the loan is secured by the real estate. They are considered short-term, with a duration ranging from three to 12 months. If you put enough time into your efforts and are careful, you should be able to earn solid returns on your investment with minimal risk.

To be successful in your goal of learning how to become such a lender, you don’t need to start the process with a large amount of money. You can fund your loans with a self-directed IRA or home equity line of credit. IRAs and other retirement plans can be very helpful in this way. Plus, if your home equity isn’t doing anything for you, you should make it work for you! It’s an exciting idea that this type of loan is open to more than just millionaires. A generous 8-12% return is possible tax-deferred or even tax-free.

To start the process of becoming this type of lender, you can lend to friends and family. Of course, remember that when people you’re close to don’t repay your loan, it can damage relationships, so make sure you define clear repayment terms to avoid this. If this route is less desirable for you, you can find projects with social value online where you can invest as little as $25. Small investments are a great way to start lending.

Once you’re comfortable with small, short-term investments, you can move on to something bigger that would involve self-directing your IRA or using your home equity to lend privately for a solid return on your investment. You can create an online profile for yourself as an investor and find opportunities to make money that way. The final tip when learning how to become a lender is to work closely with someone who has been a lender for many years.