For the last few weeks I have been writing about rentals and why they are so important to growing your wealth. The biggest reason that I cited was for consistent monthly cash flow.

Some of you have responded and said things like its too much work to find the right deal. Or, that you just don’t want to deal with the potential challenges that are associated with owning rental properties.

Today I am going to show you another way. In fact this way does not involve owning rentals…or any property for that matter.

You do not have to look for motivated sellers. You don’t have to chase foreclosures, or short sales, or REO’s. You don’t have to chase down buyers or tenants. In fact you don’t even need to step foot on a property, do repairs or even buy a house.

The opportunity that I want to share with you is how to be a private lender. This is where YOU become the bank!

That’s right you can make monthly passive cash flow as a “private bank”! There are numerous ways to be a private lender. Today I am going to share two.

The first way is you can partner with someone on a flip or rental property. You put up the money. They do all the work. You get paid a pre-determined interest rate on the deal while the money is tied up on the project, AND then after that you split the profit 50/50.

Notice how I said “AND”. You can make interest on your money and share in the profits. That’s a great deal for you if you have the capital.

This way of being a private lender has a little bit more risk and some time involvement than the next way that I want to share with you.

If you want to be a truly passive investor you can lend your money on real estate as if you were a bank. One of the best ways of doing this is by having your money secured against real property through a note and deed of trust.

A note and deed of trust is in essence a mortgage like you have on your house. Except in the case you are the bank. If the borrower were to default you could foreclose, leaving you with the property as collateral.

In exchange for your capital that is lent out on a specific property, you are entitled to monthly interest payments. This is the “cash flow” that I was referring to. Your security is rock solid, especially if your loan is against a property that is under market value.

Many people, maybe even you, have money that is sitting idle in a IRA or 401k not doing much. Or, its possible you have money earning extremely low returns in a CD or money market account.

If you have money in an IRA or 401k you can transfer it to a self directed IRA and then have the ability to invest it in most any vehicle you see fit. This includes the ability to lend it.

Remember this is one of the most secure investments that you can make. Your money is not tied to the whims of the stock market. It’s not at risk of a company going bankrupt. Your money is completely secured against a property. And, in the unlikely event that the borrower chooses not to pay, you can exercise your right to foreclose. At this point you have the property, which of course you can then sell and get your capital back.

You also can choose the length of term that your capital is out. Your term could be for as short as 6 months or as long as you like. You get to decide up front before you lend it.

The best thing about being this type of lender is that you don’t have to have millions of dollars. In fact there are ways that you can lend if you only have thousands…not even hundreds of thousands.

This is the most passive and hands off approach to investing that I know. And a way to compound and grow your wealth at rates that are substantially above what the banks are offering and even greater than what the stock market is providing.

If you want to learn more about this…or would be interested in this type of investing reply in the comments below and I will be in touch.

To your wealth and success,

Andy