How I Built A Private Lending Business & Double Digit Returns
Capital is power…
For decades, banks have been the go-to lending source for everything. And especially for real estate.
But times are changing. Tighter regulations, slower underwriting, and rigid lending criteria mean diminishing customer experience and, for Operators, an inability to get capital when and how they need it, fast.
Deals can fall apart simply because traditional financing moves too slowly, or they just change their minds (yes it happens, and always within a few weeks of closing).
That’s where private capital steps in. By stepping into the gap that banks can’t fill, private lenders are providing short-term, flexible loans that keep deals alive. In exchange, they earn high returns, shorter timelines, and, in some cases, equity ownership (without equity in).
Over the past few years, private lending has become one of the most effective ways for investors to generate consistent returns and control of risk not possible in the stock market.
Why I’m Building a Private Lending Business
Capital works harder and faster
Flexible structures create yield and upside
Don’t be foolish, nothing is without risk
As you read, focus on how you can benefit.
Capital That Works Harder and Faster
In real estate, speed often wins. Traditional investments lock up your capital for years, but private lending loans often last only a few months.
That short duration means you can recycle the same dollar multiple times per year, compounding your returns in a way long-hold strategies can’t match.
My $2.3M loan book was funded with $875,000 of actual capital — because the same money kept working again and again. That’s the power of velocity.
Flexible Structures Create Yield and Upside
Private lending isn’t one-size-fits-all. Two of our most common and profitable structures are earnest money deposit (EMD) and gap funding loans.
An EMD loan gives an operator the cash to secure a deal. You can earn strong fixed returns. Because of the criticality of the loan we even secure a small slice of General Partner ownership. That equity kicker creates a second layer of upside, pure bonus.
Gap loans, on the other hand, step in when an operator is short on capital. Because the need is typically urgent, these loans command premium returns. Even a two-week gap loan can receive a 1 - 3% fixed fee (annualized, this is 52 - 156%).
By choosing the right structures, you can position yourself for both immediate yield and long-term value.
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Nothing is without Risk
High yield means little without protection. While high returns are possible, a single loss can take 3+ loans to earn back lost capital.
That’s why I’ve built safeguards such as:
Working only through trusted referrals.
Securing loans with collateral through filing liens and UCC claims to protect legal rights.
Controlling the flow of funds through escrow and oversight.
Building close relationships with borrowers to manage the loan and stay close to progress & problems.
Unlike big banks, you also have the advantage of flexibility. You can adapt loan terms to fit the deal, move faster than institutional capital, and build repeat borrower relationships — lowering risk while creating a steady flow of opportunities.
There is such high demand that you can be selective in the borrower and project you fund. Total control.
So What Can You Do?
As an investor, your capital carries power. As a private lender, you can step into a gap, generate premium returns, and still protect your capital with smart structures and layered risk management.
Now that you’ve learned the mechanics, the question is simple:
A: I like the concept, but have no interest in doing the work.
B: I like the concept, and I’m interested in being a lender.
If A, let’s chat and explore how Blue Eyed Capital’s Private Debt Fund can support your investing objectives. Schedule a call today.
If B, here are 4 steps to get yourself started as a private lender:
Start with trusted relationships — only lend to operators you know or who come referred. Do you know anyone doing Fix & Flips or in Real Estate?
Start small — short-term loans with clear exit strategies are the best way to learn.
Secure your position — always document with collateral, escrow, and legal filings. Find an attorney to create: Loan Agreement, Promissory Note, and assist in Lien Filing. Maybe you have a lawyer friend.
Stay disciplined — create clear terms, enforce penalties, and treat it like a business. Memorialize loan conditions: weekly checks, visit the fix & flip project, get photos, track capital raise progress, etc.
Both paths are valid — it just depends on how involved you want to be.
Cheers,
Jon