BiggerPockets Real Estate Podcast - He Bought 50 Rentals, Then Stopped to Do This (Makes $5,000/Month Per Deal)

Episode Date: April 29, 2026

Struggling to find cash flow these days? You’re not the only one. Today’s guest built a portfolio of 50 rental properties before margins started getting thin, but one giant pivot changed everything—a pure cash flow play to complement the appreciation and tax benefits from his rentals. If you want cash flow, he’ll show you exactly where to find it! Today, Devon Kennard makes 12%-14% returns with an investing strategy that doesn’t involve tenants or toilets: private money lending. Better yet, he’s often able to recycle the same capital multiple times per year for even faster returns. And yes, this is real, passive income. Despite scaling to over $12 million in assets under management (AUM), his tech stack allows him to spend just 25 hours a week on his real estate business. It sounds too good to be true, but with some capital and a few tools, you could start doing private money deals that give you the monthly income you’re unlikely to find with normal rental properties. Devon shows you how to get started with as little as $10,000 and even breaks down a standard deal where he makes $5,000 in monthly cash flow—plus fees upfront! In This Episode We Cover How to generate massive cash flow with private money lending Why Devon pivoted to passive investing after building a 50-property rental portfolio How to structure your own private money deals (with as little as $10,000) The three “levels” of private lending you can start using in 2026 The tech stack that makes private money lending easy for new investors And So Much More! Check out more resources from this show on ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠BiggerPockets.com⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠h⁠tt⁠ps://www⁠.biggerpockets.com/blog/real-estate-1271. Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Email ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠[e-mail]⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Learn more about your ad choices. Visit megaphone.fm/adchoices

Investor Devonkinart started buying rentals back in 2014 and quickly scaled to 50 properties. The formula was working, but then something changed. As home prices and interest rates rose, his cash flow started shrinking. He needed a business model that worked in today's market. So he pivoted and ultimately landed on a game-changing new strategy, lending out money to other investors. They do all the legwork of pulling permits, managing. Rehabs and finding tenants. He just sits back and collects passive 12 to 14% cash-on-cash returns back by the properties

as he recycles his capital over and over. And I know what you're probably thinking. I don't have a giant pile of cash to start lending out. Well, there are ways you can get started lending and follow Devon's path with as little as $25,000. If you want real cash flow, as much as $5,000 per. per month per deal. Devon's giving you his exact playbook right now. What's up, everyone? I'm Dave Meyer, Chief Investment Officer at Bigger Pockets.

Today, we're talking private lending with Devon Kinnard, so let's jump right in. Devon, welcome back to the Bigger Pockets podcast. Thank you. It's been a while. Glad you. Glad to be on. It has been. We've got a lot to talk about, but for people who haven't heard from you before, maybe just fill us in a little bit about your background. Yeah, so my name is Devon Kinnard. I was a nine-year NFL veteran. and I played for the Giants, Lions, and Cardinals. I started investing in real estate in 2014.

I built a portfolio of properties up to 50 properties. I also started investing in syndications and funds, and I invested in 50 different syndications and funds. So I was kind of split 50-50 between owning real estate on my own and investing as an LP in syndications and funds. And then towards the end of my career, I started kind of pivoting and doing some private lending where I was lending to investors and developers

and people who are doing projects. And that's kind of my focus today. Well, we're going to focus most of the episode on lending because I think this is a strategy for real estate investors that most people overlook. Yes. But I want to sort of talk first just about your journey and how you arrive because it sounds like you've done everything.

Yeah. Like, how did you get to lending? So you started first in long-term rentals and you got 50 properties. Yeah. Was that all over the country or where were you built? So I started out in the Midwest. My first property ever was in Beach Grove, Indiana. I bought a large portfolio in Kansas City, Cleveland, Ohio, and a little bit in Tennessee.

And I just scaling, buying pretty much every offseason was buying a bunch of properties, just as many as I can get my hands on that I felt were a good deal. I built my core for a team, which I know kind of a bigger pocket staple from back the day. So I built that team. That's how I was able to do it in those different markets. And I kind of started doing the syndications because I was getting to a point where the deal started did not look as good of deals. And I felt like things weren't cash flowing the same way that they

were when I first started buying in 2014. So I was like, if the cash flow is not that much more, I'll invest passively in the syndication. And do less. And get an 8% prep. I don't got to worry about as much. I don't have to deal with as much. So I started that and I was investing in all kinds of different syndications. I was trying to diversify that way with like multifamily, single family funds, debt fund. Like, you know, I was just kind of spreading, spreading myself. I'm out diversification-wise. And that was kind of like how I built my foundation. When you were doing the individual active stuff with single family?

Yes. Just for comparison sake, what were you getting cash on cash return in 2014? So I was killing the 1% rules. Yeah. Like, you know, I was buying somewhere between $80,000 to $100,000. And blue collar, I would say like B minus to B neighborhoods. So not anything great, but like good working class neighborhoods. But I was paying $100,000 or less and getting.

And getting $1,200 or more in rent. So I was defeating the 1% rule. And I had the cash. So a lot of them, I was buying cash. I would, like, refinance later. But I was locking them up cash. And I was buying turnkey, which is another huge thing. I wasn't trying to buy stuff I needed to renovate because I was worried about Sack and Aaron Rogers.

Man. So with my focus being on ball, I was buying turnkey property. So to think you could buy a turnkey property for $100,000 in charge $1,200. insane. We miss those days. We sure miss those days. But as we're going to talk about in this episode, there are ways to get great cash flow. So then syndications, you sort of evolved. Like you said, 8% preferred equity return. That's just people who invest passively into these bigger syndications, like buying a hundred unit multifamily. You, Devon, would put in money passively and someone else would run into a deal. So what was your experience like there? So I loved that, but you have,

have no control or say. Yeah. So, you know, when you're buying on your own, I get to choose to refinance, to sell, to, you get to manipulate the deal how you see fit. And when you start to invest as an LP, you do your work up front. You underwrite the operator, the deal. And then you pretty much got to like sit back and let them do what they do. And to lose that flexibility, I started to not like that as much, especially when deals

you thought were going to go good, don't go as good. You thought they were going to like pay your preff, but then they say they're suspending the preferential return. So you're expecting 8% and they suspend the payments. Different things start to happen and where it's like, I have no control. And I just like kind of. It is a hard part of it. It's like you're on a roller coaster and you're just like, let's see what happens. It really is.

It's like set it, forget it. But it's not even like, you know, you have no control on a stock, but you can always sell a stock. With the syndication, it's not even like that. No, you can't really get out. Yeah, you can't. Which isn't to shy anyone away from investing in them because I still do and I still will, but it's definitely a feature that you have to be aware. Yeah.

I think, you know, I invest in syndications too. It's been maybe the majority of the investments I've made over the last couple of years. But it's because I have an active portfolio that I can do it. It's like a balance. You can't do it with money you need. So then at what point did you discover, lending. Yeah. So I kind of started to look at it. And as the years went on, and now we're getting to 2022, 2023, I didn't see things cash flowing as well anymore. So I cared about cash flow.

My career is coming to an end. I want to get into the position where I got enough income coming in. So with cash flow as a priority, buying single family didn't make as much as much sense. I think there are a great investment for appreciation and the tax benefits, but for cash flow, not so much. So then I looked at syndications and I'm like, there's an, 8% prep, but you got to wait 3 to 5 to 7 years, depending on the deal. And they can stop the payments at any point in time if things aren't going right. So I like them, but I'm like, that's also not as great as I, like, anticipated. And I allocated a lot of money there.

And I'm like, all right, so what else? And I started to like pivot and look. And my career was coming to an end. And I'm like, you know what? I'm going to lend to a couple of people. So a few borrowers asked me for some capital. I would consider lending to them. First deal I did, I had no idea what I was doing.

Yeah. But I kind of learned and I'm like, you mean to tell me you're buying this property, you need capital to buy the property and renovate the property and you'll pay me a set interest rate every month. And then when you sell the property, you'll pay me all my capital back and then I can go do it again. I like that. Yeah.

So I, you know, I tried it. I didn't fully know what I was doing. Did it a few loans, worked out. And then I just started to build it up and I created a business. based on it. Awesome. Well, we're going to talk more about the business and what you're doing. And we're also going to talk about how more investors can get into lending than they think. I think this is something you got 50 grand, even 25 grand, you can probably get into lending. There's all sorts of ways to do it. But let's just start with the basics. Like, people call it

lending, right? What does that mean? Like, give us the basis. So essentially, when you're lending, there are people who have deals and they're looking for capital and they can get capital from a bank from a hard money lender or they can go directly to somebody who has a self-directed IRA who has $100,000 just

that they want to take out of the stock market and they're like, I don't know what else I want to do with it, they'll be. And they can come to that individual or that individual can go to the person that is investing and say, I have this money, can I lend it to you or on the reverse?

Can you lend it to me? you have $100,000 or you have $50,000 where you lend it to me on this project, your collateral is the property. So if I don't pay you, you can take over this property. Exactly. Yeah. And I'll pay you a set interest rate. Yeah.

And people think that it's more complicated than it is. And it's really just a document. So it's a loan package. So you have to go through the process of getting a loan package. And so that's some upfront work there. But beyond that, it's really just you're lending them money and the collateral is the asset. and they have to pay you back and they have to abide by the terms of the loan agreement. And it's a great vehicle for cash flow.

So I think not only is it a great investment opportunity, I think it should be a part of more people's portfolio than people consider. I completely agree. I started doing it four or five years ago and I've just continued to like shift more and more of my capital into private lending because, as Devon said, I just want to make sure everyone understands this. These are loans that are backed by heart. assets. This is a thing where, just for example, Devon gives that a loan, the borough pays 20, puts

20% down. If at any point that borrower does not make payments, Devon can take over that property basically for 20% off, right? Because he's already gotten 20% down. So he's basically paying 80% for this property. Then you probably have to finish the project or sell it to another flipper or whatever. but it really limits your downside risk, right? Yeah, it completely limits the risk because if you're doing it right, you're only lending at 80% or sometimes for me, I lend 70% of what the sell prices should be. So 70% of the ARV.

So as long as I can get it to the finish line, I have 30% of equity in the deal, which is a ton of room to where you can sell for a discount if you need to sell it for. It gives you a lot of leeway to make sure that your capital is protected and that you can make additional money in it. So I think it's a great vehicle for that that a lot of more people who just have $25,000, $50,000, $100,000, you got to take some time to learn how to do it.

But once you learn it, it's one of those things you like learn once and you can kind of repeat and do it over and over you. Yeah, and it's not as unique every property. You know, like once you learn how to underwrite them, you can just kind of rinse and repeat it. You still have to get deal flow and do your due diligence and stuff. I would say the deal flow is the hardest part

because you got to find operators who need the money. But if you can build the relationships, go to some real estate meetups, find out who's doing good projects, who could use some extra capital. And then you find a couple people and you lend them the money over and over again and you build a good relationship. And they're incentivized to do right by you because they know you'll keep doing business with them. 100%. I feel like it becomes a great tug and pull relationship. So for those who need cash flow, at least for a portion of their investment portfolio, It is a great vehicle.

So I think a good supplement is like I buy assets for appreciation for the tax benefits. So I can 1031 into other assets down the line and play that whole game, but they're not cash flowing green. So I'm also putting some money in lending that is giving me a double digit return on my money that the borrower is doing all the work. They're showing me why the deal makes sense. All I have to do is review it and make sure they sign the documents. That's absolutely right. I think about it exactly the same way. And I want to talk more about how people can get into this because you can get into it.

Even if you think you can't right now, there's a lot of ways to do this. But I want to talk about that cash flow and how much you're actually earning. Because you said double digit cash flow, which you just, it's very, very difficult to find in rental properties right now. So we're going to hear about what Devon is actually making and how you two can get into lending right after this quick break. Stay with us. Everyone loves talking about big returns, but here's the problem. Returns don't tell you how efficient your investment actually is. Because once taxes hit, that great deal can look pretty average.

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with plans that harmonize your business, your family, and your dreams. Get financial advice that puts you at the center. Find your advisor at IGPrivatewealth.com. Welcome back to the Bigger Pockets podcast. We're here with Devon Kinnar. talking about how he's really shipped in a lot of his portfolio and investing style more and more into private lending. Talked about cash flow. I agree one of the best ways, maybe the best way to make

cash flow in real estate right now. Do you mind sharing with us like what the returns are for you? Yeah. So for me, I charge 12% and one point, but I also charge a 995 processing fee and a $500. Okay. So essentially, I'm making $1,500 from processing and doc prep. And let's say it's a $500,000 loan. That's $5,000 plus $1,500. So $6,500 when the loan is closed, plus I'm charging 1% interest. So they're paying, you know, on a $500,000 loan, $5,000 a mile.

Unbelievable. And then where it gets really interesting is I don't, I have no prepayment penalty because a lot of fixing flippers, they want to get in and out of properties. You know, we're both really good friends with James Danner, for instance. He doesn't want to take a full. year on a project. If he can get in and out in four to six months, he's getting in and out. So if I find someone like him, I can do that same loan twice. So I get $500,000 and I charge

$1% origination fee and $500 in extra fees. And then I do it again a second time. Yeah. So now I, in a year, I made 12% interest plus two points because I did the loan twice and another $3,000 in fees. Yeah, so you turn it twice basically twice. Yeah. So you get double the fees over the course of a year. So essentially on $500,000 in that example, which you can mitigate that to $100,000, $50,000. Yeah, whatever, yeah. But on that example, you can really annualize 15, 16% on your return.

Unbelievable. So how many investment vehicles that are collateralized by real estate can give you that kind of return? No, I mean, none, right? Find me another property. Like right now, without doing, heavy value ad, you're not finding that kind of cash flow anywhere. And even doing heavy value out, it's pretty hard to find that. I do want to tell everyone, though, like the one

caveat to this is unlike cash flow you get from a rental property, it is subject to ordinary income. Yeah. Now, if you do it from a self-directed IRA, that's kind of a bonus way to do it, where you can get money and put it back into your 401k or if you have real estate professional status, there's ways to do that. But you should know that unlike, there's no depreciation offsetting that income. So you do pay tax on it. And I think that's why it's a great strategy to have in conjunction with buying real estate. Because if you're buying assets and they're not cash flowing that well, but they have great tax benefits and the appreciation is wonderful, offset it with some private lending. That cash flow is great. But now you got tax penalties.

And now you can, since you own, you can run cost segregation. You can do things to wipe out that earned income and really make them work in tandem with you. each other. Isn't this the fun part of real estate investing? I love this part where it's like the portfolio strategy where you're sort of like, oh, this deal will, you know, check these boxes for my portfolio, the tax benefits, the appreciation, the amortization. Not every deal is going to give you all that plus cash flow. You turn to private lending. You get cash flow. Maybe you don't get the tax benefits. But when you marry these things altogether, that's what gives you sort of the full complement of benefits from that you get from real estate investing. Absolutely. So let's talk a little

bit about different ways people can get into this. Because you've talked about doing direct loans, there are debt funds. Like, what are some of the different ways our audience should think about getting into private lending if they're interested? Yeah. So first few that come to mind is one, you can learn to do it direct. And that's the one that's going to be most profitably. So that's why I've created a business around what I'm doing and why on my own dollars I can make 15, 16% annual. But I'm operating it as an actual business. It's more. an active income for me at that point because I'm operating a full business. But if you go that route, you can use your own money. You know, if you have line of credits, you can raise other

investor money so you can turn it into a legitimate operation and do really well. That's the first way. If you want to be more passive, you can invest in private debt funds, which essentially does what I do, but they pay you a coupon. So they pay you 8 to 10% depending on the fund and all of that. And it's the same structure, but you just get a smaller piece because you're investing in the fund. So that's the second way a lot of people do. And then I guess kind of an in-between is a lot of people do it through self-directed IRAs and self-directed even 401Ks. And there's different ways to where now you can do it and do it tax-free. And now you're allowing it to grow within your self-directed program.

So you can invest in debt funds that way. You can do it direct that way. So I wouldn't say it's like a separate way to do it, directs versus. a fund, but the self-directed is just a way you can avoid taxes. Yeah, which is awesome. So if you have that, it's a good way to leverage. You can't use it just so everyone knows. Like, it's just like a 401k IRA.

You still have to wait till your whatever, it's 62 or whatever it is, before you pull it out without penalty. But it allows it to compound way faster. So if you can wait, that's really the way to do it in my experience. There's also one other way to do it. I've done, I don't do a lot of it, but you could actually buy individual notes. that other people have originated.

So, you know, if Devon, just as an example, he made a loan to a flipper and he's like, you know, I don't want this one anymore. Dave, do you want to buy it? I could buy it from him. Usually you get somewhere between what Devon earns on his private money at, you know, 15%, the 8 or 9% of a, of a fund, you can get like 11% on some of those notes.

And that's a great example because I have a lot of investors who want to do that. And some people will call it an assignment. So I have this loan and they understand I'm running a full business. They're like, can I buy all or a portion of your loan? You just did this billion dollar loan. Can I buy $100,000 of it and get payments on that? And we work it out. We do what they call an assignment agreement and I pay them their portion of the interest

on their $100,000. So there's a lot of people who really like doing it that way because it's kind of, it's not going full debt funds. Yeah. Because a debt fund, you're kind of tied to the business overall. and the fund overall. It's more direct. Like, okay, I'm connected to that one deal.

When that deal's paid off, I get my capital back. And there's some investors who really like that model instead. And it's a good way to where you can, if you only have 25, if you only have 50, if you have 100, you can buy a portion of somebody else's loan and get a really good return on it without having to do a lot of the work and with a smaller dollar amount. Some investors say, I don't want to invest in a fund because I don't know the assets that are backing every loan in that fund. But I'll buy this loan from you, Devon, because I've seen that house. I know that operator. I've underwritten this deal. And I know this is a good one.

And so that's a really good way to do it as well. Let's talk a little bit about what does it take? What's a good deal? Tell me what you look for in a good loan. So there's a few things. The first thing I'm looking at is what's the purchase price, what's the as is value, and what's the projected ARV. And ARV is just after repair value. Those are some of the the most important metric. And if you know those numbers, for me, I want to make sure that they always have at least 10% down of what they bought it for. And I want that to be at least 80% of what the as is value is. Okay. So like if a property is worth a million and they're buying for 800,000, I like that because you got equity cushion. They got 200K of equity cushion.

And then they're still putting down 100K. So my loan on that would be 700K. Right. So it's worth a million today. I'm bringing 700. Yeah. Bringing $700. The as is 800. That is a very safe loan. For sure.

And then the ARV is 1-4. And they plan on putting like 200K into it or something like that. Like I'm just, that's a good way to do it. So like those are some of the numbers. So if I find out what the what the as is, what the ARV, and what the purchase price is, I can back in to what I'm comfortable with.

And granted, if it's a super experienced opportunity, rated that I've done like 10 deals with. I can move my numbers in favor to them, give or take. But that's my base line. That makes so much sense. Yeah. I mean, just so everyone understands, Devon's talking about lending to a flipper, right? And so he's just trying to find a way that if he has to take back that property, in this example, he could go and sell it for a million bucks and he only lent 700,000 on it. Obviously, there's large numbers. You'd have a $300,000 cushion there. Same thing goes. If it's $100,000, $70,000, you'd have a $30,000 cushion that protects you in case the person doesn't actually wind up paying. Now, you didn't mention, like, repair

budget, renovation budget. Do you think about that at all? Yeah. So let's just go with that same example. And you guys can crunch the numbers down or up based on that. But it's a $700,000 loan. And let's say it's a $100,000 rehab. So they're going to put $100,000 into it. It's all cosmetic. and it's worth a million today, but they're going to sell it for one, two, in like four or five months. What that looks like is I'm funding $700 today, and I'm holding back $100 for the rehab.

So they have to bring $100 for clothes plus fees, all the fees that we talked about and all that. So it's really like a little more than $100. But let's just keep it simple, 100 for clothes. And now they're in a position where, as they have to have the money to complete some of the project. So they do demo, and they order cabinets

and they start to lay the new floor and then they send me pictures and invoices that the work is done that they paid for everything that they paid all their vendors and I released the fund so let's say that first draw is $25,000

we did demo, we bought new flooring here's all the receipts, here's all the pictures and I give them that so they can move to the next stage of the renovation. Now I'm able to charge as much as I charge at 12%

because I can do it faster than bigger lenders. Interesting. So the bigger lenders who are doing it $100 million alone, they are going through draw process extremely long. Like how long? Like literally weeks? Yeah, yeah.

Two weeks, that's costing them money. For me, I'm like, you show me pictures, you show me invoices, and I can ensure that they're paid. I'm releasing in 24 hours. That's allowing you to move to the next stage of your rehab, which is allowing you to go to market faster. So people are always asking me, how am I able to charge so much?

I mean, not everyone wants to pay that much, but they see the advantage of being able to operate that fast and get through the project and back to market. You can earn bigger returns. You're talking about 14, 15% versus 8, 9% with the debt fund. But there's other parts to this business. And I want to pick your brain about how much, how passive is this really, how much work you have to do? We've got to take one more quick break. We'll be right back. Quick gut check. If your investments are generating income, how much of that are you actually. keeping. Because a lot of people, they focus on yield and ignore tax impact completely. Multi-family real estate, though, tends to solve for both. You get cash flow and with depreciation, you may be able to reduce your taxable income at the same time. That's the approach BAM capital takes.

They're not chasing flashy deals. Bam focuses on the long game, prioritizing steady execution and the potential for tax efficiency over time. For accredited investors who want real estate exposure without the day-to-day work, it's a model worth looking at. Learn more at biggerpockets.com slash bam. Only for accredited investors, past performance is not indicative of future results. Let's talk groceries, specifically your groceries. With Instacart, you want your groceries just the way you like them, right?

Well, the Instacard app lets you do just that. They have a new preference picker that lets you pick how ripe or unripe you want your bananas. Shoppers can see your preferences up front, helping guide their choices. Instacard, get groceries just how you like. Dear Canadian exporters, our ambitions, our ideas, and our potential were never meant to be boxed in. Nothing can contain us.

With the support of Export Development Canada's market insights and financial solutions, you can turn obstacles into opportunities, discover new markets, and keep our nation front and center on the global stage. The world needs more Canada. Together, let's give it to them. Visit edc.ca to learn more. Welcome back to the Bigger Pockets podcast. Devon and I are here talking about how private lending can be a cash flow machine for your real estate investing portfolio.

Before the break, Devon was talking about his underwriting process and how he protects himself against losing money on particular deals. But I want to talk about operations because you were talking about draws. You also have servicing, right? So talk just through like the lifetime of a loan. Once you fund the loan for the purchase and acquisition you talked about doing that drop process, what other work are you doing throughout that project? So you have to monitor it all, but what a lot of people who aren't in the industry don't know is because of AI, because of software, there's now tech that automates all of this for you.

So for instance, on my website, borrower, submit a loan application, it comes in, it processes. I have notifications, like I say, I get a text message in an email that a new loan came. in. It automatically populates the ARV and as is based on what the borrower's numbers are. My wife who runs internal valuations gets an email and she confirms the price of the property. So it's kind of streamlined with the correct software. So people always ask like, how does that work? And even with the rehab draws, they are submitting through this stuff. Yeah, I mean, that's so awesome. Submitting pictures. Oh, that's so much easier. I'm getting a notification and I go, I look at it.

check it, approve, and the money gets sent. Oh, that's awesome. And then I get a notification if a payment doesn't come through. So, and then people are like, oh, is that expensive? I mean, once you're scaling, it's $1,000 a month for this software. Yeah. And that's the kind of the standards. Totally worth it. Yeah. When you're, when you get to a point where that makes sense. So some people will do it just in Excel and they do their own thing. I know you're good on Excel. Not that. Not that good. Not like that. But for me, I'm like, I'll pay the $1,000 a month for the software that automates the entire, from beginning to pay off, it's automated.

So that's one thing. And then with loan packages, there is a software slash attorney company called Lightningdocks. That's powered by Fortra Law, which is a big hard money lending law firm in California. You can get a full loan package in whatever state you're in. And you've got to pay $500 up front to get access and then $500 per loan file. That's it. And it's a full 300-page loan package like you're a big lender. That's awesome.

Yeah. It's true. That stuff just become like commoditized. Like it's, you don't have to pay, think back in the day, probably take 10 grand for that law package. Contact an attorney and figure it out. And they got to look like you can literally get full loan package even if you only have $20,000 to lend and have a full loan package. It's so awesome. It does make it so much more achievable.

Yeah. Even if you want to do one deal. Like you can go. go out and do that. It makes it, you know, if you were in the back in the day, if you were going to do one deal, the loan docs would probably eat up your whole profit. But you know, you do this. It makes a lot of sense. So just give us like on an average deal, like how much time does it take you, you know, underwriting and then the servicing, like how passive is it? I would say on any one deal, I probably spend of actual work three hours, Matt. I hate you. It's work that needs to be done,

but a lot of it is kind of quick. It's automated. It's automated. Yeah, that's so cool. I got to make sure that this happened. I got to check this. So when you compile all the minutes, I would, if I had to guess, it's under three, three hours per day. This is why it's so great. You're getting, you're getting 14% cash flow working three hours per deal.

You're obviously investing other time. I don't want to, you know, deal flow is hard. Making those relationships is hard. It's something you got to do. But I would imagine it gets easier over time, too. I would say even operating it as a business like I am, it is a lifestyle. these needs. Still. I, you know, I, at this point, I have 12 million assets under management that I'm operating and I work less than 25 hours of intentional hours.

Amazing. That's the dream spot. I think 25 hours is like perfect for the amount of time. That's awesome. And that's because I want some. Right. Yeah. Deal flow and I want to keep growing. But if I wanted it to be less, it could be. That's, that's cool. So scale that back if you just want to do a couple of loans. Like, it's like, you're just going to do loans when you have available capital. You're talking a couple of hours and you've done it. So I honestly, I'm not, I don't think it's something that the only thing that everyone needs to do

because I do other things. I own real estate. I've invested in syndications. But I think it's an underrated vehicle that not enough people are tapping into it. Yeah, for sure. Yeah. And just want to reiterate for everyone, there are different ways to do this.

You can go full business, like what Devon's doing. This is basically being an active investor in loans. you gave us a number around 14%, probably you need 12 to 14%, let's say you can earn on that. But you'd have to do the deal flow yourself. You need to do the origination, but as you've shown us, that's not that hard. If you want to do a little bit more passive, you can do in debt funds, you can probably earn 8 to 10% pretty because that's the rate. I invest in a few. Eight to 10% is about where it is.

Or you can buy individual notes. Or you can also just make individual loans to people you know. Like what Devon's saying, he's scaled up this whole business. But like, if you want to just dabble in this, you can find an investor either who does a rehab project or wants to flip and lend them 50 grand. Like that is an absolutely feasible way to get started, right? Many people do that. I know a lot of guys who just, they have a little extra money and they have one or two people that they lend to whenever they have money available. And they're the only people that they lend to because they built a relationship and they're comfortable.

And it's a great side hustle. Is there a minimum amount you think people need? to get into this? Personally, I would draw the line at 50,000. It's like, it starts to like, if you got 25, I guess you could do it. If you got 10, if there's somebody who wants it that bad, I guess I'll take it. But like to start for it to be meaningful to you and to the investor who needs the money, I think 50,000 is a good number.

So if you can build up to the point where you have $50,000, there's an investor that would value that and pay a healthy interest rate to you for it. That makes a lot of sense. Yeah, I will say, though, that there are now funds. that you can put in like five grand into. And that, that's good because Devon makes a good point. If you're going to try and lend five grand to a flipper, they're going to have to do that 20 times to raise 100 grand to flip a house.

They're never going to do it. It doesn't make any sense. But if you just want to get a taste for this, learn a little bit about it or 10 grand, you know, you want to make $1,000 bucks a year just in cash flow off of that. You can look into debt funds as well. Do your due diligence on all of those things, of course. But like you can get in for even less.

But it's a good point. 50 grand makes sense if you're a good point. going to like do the direct lending thing. Absolutely. This has been awesome, Devon. Thank you. Any last advice or thoughts here for people who are considering this? I mean, reach out to me.

You can reach me at Devon at we are 42 Solutions.com. That's my email. If you have any interest in lending, happy to help the bigger pockets community. I'm an author for BP. So my book is real estate side hustle. I talk about all the ways to kind of have a nine to five career while still investing in real estate.

So we cover everything we talked about today, investing in single-family properties, investing in syndications, and getting into private lending. And I dive into all three in real estate side hustle. So I'm happy to be a resource to anybody out there interested in any of that. Awesome. Well, thanks so much, man. I appreciate you being here. Always a blast, man. And thank you so much for watching this episode of the Bigger Pockets Podcasts. We'll see you next time. Thank you all for listening to the Bigger Pockets Real Estate podcast. Make sure you get all our new episodes by subscribing on YouTube, Apple, Spotify, or any other podcast platform. Our new episodes,

come out Monday, Wednesday, and Friday. I'm the host and executive producer of the show, Dave Meyer. The show is produced by Ian K, copywriting is by Calicoe content, and editing is by Exodus Media. If you'd like to learn more about real estate investing or to sign up for our free newsletter, please visit www.W.W.com.

The content of this podcast is for informational purposes only. All host and participant opinions are their own. Investment in any asset, real estate included, involves risk. So use your best judgment and consult with qualified advisors before investing. You should only risk capital you can afford to lose. And remember, past performance is not indicative of future results. Bigger Pocket's LLC disclaims all liability for direct, indirect, consequential, or other

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