Earn like a lender. Think like an underwriter.
Real-estate-secured private loans can pay high single- to mid-teen interest, but returns are earned by taking credit, liquidity and fraud risk. Learn the structures, run the net yield, and join our investor list for education and vetted opportunities.
Example first-lien note
- Loan amount$200,000
- Collateral value (ARV)$320,000
- Loan-to-ARV62.5%
- Coupon / term11% / 12 months
- Monthly interest to lender$1,833
- Lender points (1.5)$3,000
- Gross 12-month income$25,000
Hypothetical and for illustration only. Defaults, servicing fees, legal costs and taxes reduce real returns.
Four common structures, compared
| Structure | How it works | Typical minimum | Typical target yield* | Liquidity | Your control |
|---|---|---|---|---|---|
| Direct first-lien note | You lend to one borrower, secured by a recorded deed of trust or mortgage | $50k–$250k+ | 9–14% + points | Locked until payoff | Full: you underwrite |
| Fractional note platform | Buy slices of individual loans originated by a platform | $10–$5k | ~5–18% (by risk grade) | Low; held to maturity | Pick loans, not terms |
| Private credit / mortgage fund | Pooled fund lends across many loans; you own fund units | $500–$100k (often accredited-only) | ~8–12% | Quarterly or gated redemptions | None; the manager decides |
| Self-directed IRA lending | Your SDIRA custodian funds a note; interest grows tax-advantaged | Varies | Same as the note | Locked until payoff | Full, within IRS rules |
*Ranges observed on publicly available platform and fund materials (2025–2026). Targets are not guarantees. Past performance does not predict future results.
What can go wrong, and how pros protect themselves
Default & foreclosure
Borrowers miss payments. Foreclosure can take months to years depending on the state, with legal costs. Protect: low loan-to-value, first lien, strong borrower track record.
Overstated values
An inflated ARV makes a risky loan look safe. Protect: independent appraisal or BPO, your own comps, conservative ARV haircuts.
Fraud
Fake deals, double-pledged collateral and Ponzi-style funds. Protect: title insurance, a licensed escrow or title company, and never wiring to an individual.
Illiquidity
You usually can't sell a note quickly at full value. Protect: only invest money you won't need for the full term plus extensions.
Taxes
Interest is usually taxed as ordinary income, which cuts net yield. Protect: consider SDIRA structures and talk to a tax professional.
Regulation
Usury, licensing and securities rules vary by state and structure. Protect: use state-specific loan docs drafted or reviewed by a real estate attorney.
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