O
ne strategy for earning returns on your money in real estate is private lending, a passive approach that can generate high returns and benefit both lenders and borrowers. To get started, you'll need capital and a strong network.

    There are various ways to earn interest on your money, including lending. Mike Gorius, a Louisville-based real-estate investor, prefers working with private money lenders over traditional lenders. "We like to work with just regular people that have capital that can then receive those same benefits," he said. This strategy allows investors to generate returns similar to those of banks, which lend at higher interest rates.

    Carl and Mindy Jensen, financially independent thanks to their real-estate investments, use private lending as one of their favorite strategies. They started experimenting with it in 2016 and earn 10-12% returns. The way it works is that they lend money to other real-estate investors for rehabbing houses, earning interest on the loan.

    Private lending can be a win-win for both parties involved. Investors like Gorius close deals quickly and efficiently, often within days, whereas traditional lenders take weeks or even months. However, private lending comes with higher costs, ranging from 10% to 12%, compared to traditional lenders' rates of 6-7%.

    Yoni Miller, who lends for commercial real estate through his company QuickLiquidity, doesn't require credit checks or income verifications. He focuses on the property's value and location rather than the borrower's financial situation.

    To get started in private lending, you'll need two key things: capital and a network. Anyone can lend, but it's essential to consult with an attorney and CPA before doing so. The amount of capital needed varies depending on the market, and having a strong network is crucial for finding deals.

    Real estate investor Mike Gorius recommends consulting with title attorneys to find out who are the movers and shakers in your market. Attending real estate meetups and shaking hands with potential borrowers can also help you build your network. However, be prepared to vet potential borrowers carefully, as private lending has become a competitive space.