Collecting Keys - Real Estate Investing Podcast

Private Money & Hard Money Lending: A Real Estate Investor's Guide

Funding is the constraint on most real estate businesses. Across hundreds of episodes, Mike DeHaan, Dan Austin and Dylan Koch have borrowed from local hard money shops, raised money from individuals, had a bank yank a credit line, watched a DSCR lender call a loan, and eventually became lenders themselves. This guide collects what they've said about how these loans work, what they cost, what paperwork protects you, and where the risks sit today.

Start with these episodes

What's the difference between hard money, private money and a bank line?

On EP 30, Mike and Dan laid out the funding levers they used on off-market deals: fast local hard money, slower national hard money, private individuals, and commercial or credit union debt. Hard money comes from a company in the lending business, underwritten mostly on the deal. Private money, as Dan defines it on EP 206, is borrowing from an individual in your network — first or second position, or even unsecured with a personal guarantee.

Bank debt is cheapest and slowest. Dalyn Hazell told the hosts on EP 345 that he called every bank in town and took commercial lenders to lunch until he had secured and unsecured lines at roughly prime with no points, and hasn't used hard money since. Mike's counterpoint on EP 271: a line of credit stretches further covering the down payment and holding costs on a hard money loan than buying a house outright with it.

From: EP 30 · EP 206 · EP 345 · EP 271

What do hard money and private money actually cost?

The EP 30 numbers are a useful baseline: fast local hard money closed in about a week at 10-15% down, 11-12% interest only, 2-4 points. Slower national hard money needed 30 days and an appraisal but priced at 7-8% with 1-2 points. Private lenders ran 7-9% with 1-3 points. Kevin Amolsch of Pine Financial explained on EP 171 that his fund prices around two points and 12% interest, 100% of cost and 70% of repaired value on nine-month terms, competing on service rather than rate.

Terms scale with risk and track record. Tim Gurule said on EP 252 he charges roughly a point and 9% for a proven flipper, up to 12% and two points for riskier second-position money. David Niehaus said on EP 381 that after seven or eight deals with the same lender he negotiated no money down with the first draw funded at closing — roughly $25,000 of cash saved per project.

From: EP 30 · EP 171 · EP 252 · EP 381

How do you raise private money without wrecking relationships?

Dan's framing on EP 206: find lenders by talking openly about your projects at meetups, with friends and family, and on social media — and you don't have to give away equity to get a loan. He says demands for half a deal usually come from people with no lending experience. Justin Morgan on EP 222 suggests posting about what your investors earn rather than what you earn, noting $10K to $50K checks are enough to fund a rehab budget.

Tyler Wehrung on EP 348 rebuilt his pitch by dropping "points" language, quoting a flat $1,250 processing fee plus 11% interest-only, and guaranteeing four months of payments so lenders aren't penalized by a fast flip. Karl Huth on EP 366 raises against a scope-of-work pitch deck and over-communicates with new lenders until they tell him to stop.

Mike and Dan have grown more cautious over time. On EP 26 they argued you should treat other people's money more carefully than your own. On EP 271 they pushed back on the "no money down / OPM" narrative, saying taking a grandmother's HELOC money at a 6-8% preferred return can be unethical when it doesn't match her actual goals or time horizon.

From: EP 206 · EP 222 · EP 366 · EP 271

What paperwork belongs on every private loan?

Dan lists five documents on EP 206, all drafted by an attorney in your state: a deed of trust or mortgage, a promissory note, an insurance requirement naming the lender, a business-use document, and a personal guarantee. On EP 223, after their first foreclosure as lenders, Mike and Dan said even a one- or two-week gap loan needs a note, recorded lien and insurance — roughly $500-$600 in drafting costs, paid by the borrower, is what gives you recourse.

Position matters. Kevin Amolsch warned on EP 171 that gap funding in a junior position can leave the second lender with nothing if the first forecloses; he described an investor losing an entire $80,000 retirement account that way. Tim Gurule on EP 252 stays in first position, secures only against real estate, and only lends in states where foreclosure is practical.

From: EP 206 · EP 223 · EP 171 · EP 212

What changed with DSCR loans, and what trips investors up?

DSCR loans qualify on the property's rent-to-payment ratio instead of your tax returns. Pricing has swung hard: Mike's quotes went from the mid-4% range in February 2022 to 8% with two points by April (EP 30). By EP 430 in April 2025 the hosts were seeing DSCR in the mid-5s to mid-6s, below many agency investor loans, because lenders hold that paper themselves.

The traps are in the fine print. On EP 131 Mike walked away from a 1031 partly because the loan carried 8.5% and a five-year prepayment penalty; the hosts describe step-down prepays of 5-4-3-2-1%. On EP 244 a DSCR lender spotted a new LLC on title about 48 hours after they bought three duplexes subject-to and called the $586,000 loan due in 30 days. Refinancing out required a delayed-purchase loan with 10% down — about $60,000 in cash. Mike went through five lenders to find one that would work. By EP 464, underwriting had tightened again: lenders take the lesser of your signed lease or the appraiser's market rent, and interest-only loans are underwritten on the payment after the fixed period.

From: EP 131 · EP 244 · EP 430 · EP 464

Why did the hosts shift from rentals into lending?

Mike laid out the math on EP 356 and EP 419. His portfolio peaked at 54 units; rising taxes and insurance cut his passive cash flow roughly in half and pushed return on equity to 2-3%. Meanwhile, hard money at 11-12% on $50,000 produces about $500 a month with no roofs or turnovers. The tradeoff he names plainly: you give up appreciation and the tax benefits.

Dan sees it differently on EP 437. He keeps roughly 75% of his net worth in real estate equity and uses private lending at around 12%, with notes paying off in six to eight months, as a cash flow engine that stays semi-liquid. Mike leans toward dry powder; Dan keeps the legacy assets that still cash flow. On EP 460 they announced exiting their home-buying company to run the lending business full time. The business started almost by accident — on EP 164 Mike describes funding a wholesale buyer's deal himself at 11.5% and three points after that buyer's lender backed out three days before closing.

From: EP 419 · EP 356 · EP 437 · EP 460

How do you vet an operator before investing passively?

Mike's four safeguards on EP 212: only invest with people you know or can verify; have someone with no stake review every document; require a note, deed of trust and personal guarantee recorded by a third party; and only invest what you can afford to lose. On EP 394 the hosts add that you should look for real skin in the game — they cite a self-storage sponsor who put $8-9M of his own into a $40M deal — and treat "most of the return is tax benefits" as a red flag.

Losses are real. EP 394 mentions a GoBundance member who lost five or six $50k LP positions. On EP 434 Mike described a friend losing over $500,000 in a year with operators he considered credible. On EP 491 the hosts discussed reports that Class B investors in a Houston deal tied to Brandon Turner lost 100% of their capital, and used it to explain that LP equity sits behind the lender and can go to zero. On EP 509 they walked through an investor's allegations about Pace Morby's Sub2 fund — locked portals, unanswered emails, late K-1s — presented as claims and public filing figures, not proven findings.

From: EP 212 · EP 394 · EP 491 · EP 489

What warning signs do the hosts see in today's lending market?

After a private lending conference in Vegas (EP 466), Mike and Dan described new "rescue" products — hard money with 500 credit scores, unlimited lates, no experience required, capped around 50% LTV — and compared them to the pre-2008 no-doc era. Their key distinction: much of today's private mortgage money comes from hedge funds, foreign banks and wealthy individuals rather than consumer deposits, so a blowup would hit investor net worth more than homeowners.

On EP 486 Mike reported lenders are less worried about the economy than about tax and insurance increases turning loans written three years ago into negative-DSCR problems. He also flagged rising appraisal fraud, which is why desktop reviews are now common — Dylan had a $375,000 interior appraisal come back at $250,000 on desk review (EP 458). Fraud runs both directions: on EP 497 Dan described killing a loan the morning of the wire after a search turned up a DOJ indictment against the borrower.

From: EP 466 · EP 486 · EP 450 · EP 497

Frequently asked questions

What's a realistic rate for a hard money loan?

On EP 30 the hosts described local fast-close hard money at 11-12% interest only with 2-4 points and 10-15% down, and national hard money at 7-8% with 1-2 points. Kevin Amolsch's fund on EP 171 prices around 12% and two points.

Do I have to give up equity to get private money?

Dan says no on EP 206 — you can borrow at a flat rate with proper security instead. On EP 382 the hosts argue a money-only partner is better structured as a lender, since giving up half a flip's profit for a $100,000 check is expensive capital.

Can a bank really cancel my line of credit?

Yes. On EP 92 and EP 93 Mike described a bank canceling a $100,000 unsecured business line and demanding payoff, citing recession risk rather than any missed payment. He recommends staggering lines across banks with different renewal dates.

Why would a lender call a loan on a subject-to deal?

On EP 244 a DSCR lender spotted a new LLC on title about 48 hours after Mike and Dan bought three duplexes subject-to and gave them 30 days to pay off $586,000. Seasoning rules meant refinancing out required a delayed-purchase loan with 10% down.

Is lending safer than investing as a limited partner?

The hosts argue secured debt sits ahead of equity, so a properly documented first-position loan has more downside protection than an LP position that can go to zero. EP 171 and EP 212 stress this depends entirely on lien position, paperwork and who records it.

All 106 episodes on private money & lending