How Private Money Lending Works
If you're into the details of private money lending, this page is for you. Below are the nitty-gritty details of how the process works and your role.
What Is Private Money Lending?
A powerful way for investors to pool resources and leverage professional expertise to invest in larger, more lucrative real estate properties than an individual investor might handle alone.
Private money lending is when you, as an investor, lend your capital to real estate professionals like us, secured by a mortgage against a property. It's a straightforward and hands-off way to earn passive income — often with consistent, above-average returns.
Unlike traditional banks, private lending offers flexibility, speed, and better terms for both the borrower (us) and you, the lender. You become the bank, and we handle all the property-related tasks.
Why Private Money Lending?
- Above-Average Returns: Enjoy interest rates that often exceed traditional investments. We target returns above 10%, creating a reliable source of passive income.
- Lower Risk: We secure your investment by the property itself, which we buy below market value. In the unlikely event of a default, you have a tangible asset backing your investment.
- Hands-Free: We do the hard work of finding, acquiring, renovating, and managing the properties. You reap the benefits without the hassle.
- Quick Turnaround: Unlike other investments, private money lending often has shorter terms (6-18 months), giving you flexibility and faster access to your returns.
How Private Money Lending with Us Works
In a nutshell: you provide the capital and we do the rest of the work.
The 4 Phases of a Deal
We Find the Deals: We source high-quality real estate opportunities — undervalued properties with room for renovation and appreciation. Our sophisticated underwriting models and deep market research ensure we choose solid investments.
You Provide the Funds: Once a deal is secured, you're given the option to participate as a private lender. Here's how it works:
- Join the investor club.
- We'll send you an email with a link to the "formal" investment opportunity. Here's an example of flip in Lebanon, OR.
- If you like the offer, let us know. We operate on a first-come, first service basis.
- You'll receive an email to review and sign the legal documents for our escrow officer.
- Once you sign the documents, you'll receive wiring instructions.
- You wire the funds and then wait for closing.
We Handle the Management: Our team manages the entire project, from acquisition to renovation and eventual sale or refinancing. You sit back and earn passive income, confident that professionals are maximizing your investment.
We also send regular email updates (with lots of pictures) so you know how the project is progressing.
You Earn Passive Income: We pay you a fixed interest rate (often 10% APR or more). Depending on the deal structure, you'll receive a lump sum when the property is sold or refinanced, regular interest payments, and potentially a profit share.
How Our Private Lenders Earned 26.9% On One Deal
Discover how our investors earned an incredible 26.9% annualized return on a short-term, hassle-free real estate deal.
The Opportunity: Finding a Distressed Property
Two weeks before an auction, we met a seller in pre-foreclosure facing $40,000 in arrears. The situation was challenging, as the lender in the second position called the entire mortgage due.
Our plan was straightforward: acquire the property for $160K, take over the existing $87K loan (after catching it up), and help the seller move on by providing some cash.
The initial strategy involved rehabbing the house for resale, but an unexpected opportunity arose to sell it as a fixer-upper to a friend, reducing our risk and timeline significantly.
Read a deeper analysis
Why the Big Dumpster Was the Best Call: Lessons Behind Cleaning Out a Flip
Who Should Consider Private Money Lending?
Our ideal private money lender is a financially savvy professional who:
- Has $50K+ available to invest.
- Is looking for predictable, consistent returns.
- Wants to diversify outside of volatile stock markets.
- Prefers a hands-off approach, letting experts handle the real estate complexities.
Possible Sources of Funds
Savings Plans
- Life Insurance
- HSA
- ESA
Real Estate Equity
- Refinance
- Second Mortgage
- HELOC
Cash
- Personal Savings
- Inheritance
- Windfall
Possible Sources of Funds
Investment Portfolio
- Stocks
- Bonds
- Mutual Funds
Retirement Accounts
- Traditional or ROTH IRA
- Previous 401(k), 403(b), or 457
- SEP/SIMPLE IRA or Solo 401(k)
Why Partner with Us?
Partnering with us means you gain a trustworthy, experienced ally.
Transparency: Our investor reports are relevant, honest, and beautiful. You'll always know where your money is and how it's performing.
Proven Track Record: After purchasing $5 million of real estate, we know how to structured deals that consistently deliver above-average returns while revitalizing local communities.
Sophisticated Underwriting: Our data-driven approach minimizes risk, focusing on properties bought below market value with value add potential, and managed by professionals. Watch some example underwriting .
Respect: We treat residents as fellow humans who deserve responect, honesty, and fairness.
Let's build your wealth and improve housing, together
Get access to private investment deals, our 196-question due diligence vault, no-nonsense macroeconomic insights, proven invesetment strategies, and behind-the-scenes deal stories.
Frequently Asked Questions
Simple, honest answers becaming a private money lender is a big deal that deserves thoughtful consideration.
General Questions
- How much do I need to invest?
Our typical minimum real estate investment is $50,000. But there are sometimes opportunities as low as $10,000.
- How do I get paid?
You'll earn a fixed interest rate on your loan. Depending on the deal structure, you may receive regular interest payments, a lump sum payment when the property is sold or refinanced, and potentially a share of the profit. We will provide specific details for each investment opportunity before you commit, so you know exactly how and when to expect your returns.
- When do I need to have my funds ready to wire over?
We operate on a first-come, first-serve basis. When we get a property under contract, we'll let you know and give you access to property package. Typically closing is 10 days after the due diligence period. You'll review legal documents and then wire the funds over. It's important to wire funds as soon as you decide to invest to have the best opportunity to be part of the deal. If you're using a Self-Directed IRA, review this article.
- How does Furlo Capital get paid for its services?
Furlo Capital earns income through the successful execution of real estate deals. After paying all operating expenses — the purchase, any arrears/liens, purchase and resale closing costs/comissions, the rehab, holding costs (like utilities) — we then payoff all loans. We profit whatever is left over.
- What happens if you don't get enough investors?
It's kind of like Kickstarter. Either we get enough and fund the purchase, or we don't. In that case, we will likely lose whatever earnest money we put down for the purchase. We intend to have more than enough commitments from private lenders, so this doesn't happen.
- Should I recruit additional people?
You don't need to, but our experience is that people we like tend to know other people we would like. :) So, if you know others who might be interested, we'd be happy to connect with them and share what we're doing. Anytime one of your referrals invests with us, we're happy to compensate you in the form of a marketing or consulting service, assuming there are no ethical conflicts.
- I'm interested. What are the next steps?
Step one is to schedule a 30-minute call. We'll review your investment goals and make sure a partnership is the right fit for both parties. What to expect during the call. We can't wait to build a relationship with you! Schedule a Brief Call
Ownership Questions
- Who covers maintenance and repairs?
All maintenance, repairs, and renovation costs are covered by Furlo Capital as part of the property's management. These costs are factored into the project's budget from the outset, so you, as the lender, do not need to worry about unexpected expenses.
- Are the properties insured?
Our properties are insured with insurance benefits designed specifically for real estate investors to cover most natural disasters, vandalism, and even some maintenance issues.
- If I want out of an investment, how do I get out?
Private money loans are generally structured with a fixed term, often between 6-24 months. We encourage you to commit to the entire term of the loan to maximize your returns. However, if an unexpected situation arises, contact us, and we'll explore potential options. These may include finding another investor to take over your position, though this is not guaranteed.
- What happens if something happens to Furlo Capital?
The answer is a little bit of "it depends," but safeguards are in place to ensure you don't lose your investment.
- The loan is secured by the property itself, which means that if Furlo Capital were unable to continue managing the project, you would still hold a legal claim to the property.
- We often invest with Co-Sponsors because it helps spread the work, expertise, networks, and coverage. They can also step in if something happens to us.
- What happens if you get tired of doing flips?
When that happens (cause I probably won't be doing it when I'm 80), one of a few possibilities will happen:
- I'll sell the assets as planned and stop buying new ones. I'll return all capital to investors as the assets sell and effectively close down Furlo Capital. I'll also make introductions to other active investors if you want to continue investing.
I became interested in real estate in 7th grade and find it endlessly fascinating. If I could do any job in the world, this is it.
Fun story: The first day after I left HP - my first day "officially" on my own - it was New Year's Day, a holiday. But wouldn't you know it, a sewer line broke at a property. So, in the rain, I dug up the sewer line and made a temporary fix until I could coordinate with the city to replace it. I was all muddy & wet. I remember listening to Malcolm Gladwell's podcast and thinking: is this really what I traded my job at HP for? But when I got home, I was 100% energized! There are still days when I deal with literal and figurative poop, but for some crazy reason, I love it.
Legal Questions
- How are the loans legally structured?
The loans are legally structured as promissory notes secured by a deed of trust on the property. This provides you with a direct, secured interest in the real estate, ensuring your investment is backed by tangible assets. Before you commit to a loan, we will provide the full legal documentation for your review.
- What are my legal liabilities?
As a private lender, your investment is secured by the property through a legally binding agreement. Your liability is limited to the amount of your loan. You are not responsible for property management, repairs, or any other operational aspects of the project.
- Is there a promissory note and Deed of Trust? Can I get a copy?
Yes. Set up a call first; We can walk you through an example and share it with you.
- I'm still interested. What are the next steps?
Step one is to schedule a 30-minute call. We'll review your investment goals and make sure a partnership is the right fit for both parties. What to expect during the call. We can't wait to build a relationship with you! Schedule a Brief Call