Unlocking the Secrets of Private Lending for Financial Freedom

July 17, 2025•4 min read

Imagine achieving financial freedom while working fewer than five hours a week. That’s exactly what seasoned real estate investor and private lender Rich Lennon has accomplished. Once a traditional fix-and-flip and rental property investor, Rich transformed his career by diving into the world of private money lending, and the results have been astounding. Now managing an $8 million lending portfolio and earning up to 50% returns, Rich shares his journey and strategies to inspire others to rethink their approach to wealth building. Here's how he did it and how you can too.

From Rentals to Private Lending: A Strategic Pivot

Rich's career in real estate started with a simple goal: buy one property a year to build wealth. But his competitive nature soon led him to scale his portfolio to over 100 rental properties. Despite his success, Rich realized that traditional methods like flipping and rental income were no longer scalable for creating long-term wealth. “My balance sheet looked great, but I didn’t like my lifestyle,” he explained.

In 2020, Rich made the bold decision to liquidate much of his rental portfolio and transition into private money lending. By converting his equity into liquid cash, he was able to lend with higher efficiency, earning significantly better returns while achieving the work-life balance he had always wanted.

The Power of Fractionalized Notes

One of Rich’s standout strategies is fractionalized notes, a method that allows him to maximize returns while sharing opportunities with what he calls "lazy money" investors. Here's how it works:

Rich lends money to real estate investors at rates of around 13% interest and three points for six months, equating to roughly 19-20% annual returns.
He partners with "lazy money" investors who fund a portion of the loan at a lower return, typically 10%.
The profit difference between the borrower’s payments and what the lazy investor earns goes directly to Rich, allowing him to achieve returns of up to 50% in some cases.

This win-win structure not only helps Rich grow his wealth but also ensures that his partners enjoy secure, double-digit returns without taking on the heavy lifting of real estate investing.

Mitigating Risks: The Golden Rules of Lending

In private lending, minimizing risk is just as important as maximizing returns. Rich emphasizes the importance of diligent underwriting and following strict protocols to protect investments. His golden rules include:

Always Require Skin in the Game: Borrowers must invest at least 10% of their own money into the deal, ensuring they have a vested interest in its success.
Utilize Reverse Draws: Release funds to borrowers only after work is completed and inspected.
Secure Your Position: Always lend in the first position and avoid second-position loans until you’ve gained significant experience.
Insist on Proper Insurance and Title Policies: Protect yourself with builder’s risk insurance and a lender’s title policy for every deal.

By treating every potential borrower as if they could be a bad actor, Rich ensures that his processes and safeguards are robust enough to protect his investments under any circumstances.

Lessons from the Trenches

Rich's journey hasn’t been without its challenges. Early in his career, he faced setbacks, including a mentor taking advantage of him financially. These experiences shaped his approach to doing business ethically and responsibly. "You learn to underwrite not just deals but also people," Rich shared, emphasizing the importance of background checks and building trust over time.

One of his most significant insights? Even with thorough due diligence, things can go wrong. That’s why he structures his deals to ensure the lender is always in a secure position, even in cases of default.

Building a Lending Business with Scalability

For those looking to follow in Rich’s footsteps, scaling a private lending business starts with education and process optimization. Rich advocates for leveraging resources like virtual assistants and maintaining efficient workflows to minimize overhead and maximize returns.

He also offers an educational program for aspiring lenders, guiding them through everything from structuring deals to fractionalizing notes. His program emphasizes transparency and ethical practices, ensuring that both lenders and borrowers thrive.

Take the First Step Toward Financial Freedom

Rich Lennon’s story proves that private lending can be a lucrative and life-changing venture when approached with the right strategy and mindset. Whether you’re a seasoned investor or just starting, his insights can help you build a sustainable, scalable business while achieving true financial freedom.

If you’re intrigued by the potential of private money lending, visit richlennon.com to download his free Smarter Wealth Blueprint and schedule a growth call. As Rich says, “Good things happen when you do good business.”

What steps are you taking to secure your financial future? Share your thoughts in the comments below!