Private Money Lender Yield Calculator
Private money lending — funding real estate flips and BRRRR deals — generates 10-15% effective yields when points and short-term turnover are included. This calculator models the full annualised return for a private lender across the full loan term.
Why Effective Yield Beats Stated Rate
Points (paid upfront) compound the stated rate. A 10% rate + 2 points on a 9-month loan = 13.7% annualised yield. The shorter the loan, the more points contribute to effective yield. This is why hard money lenders prefer 6-12 month loans.
Underwriting To Minimize Default
Three highest-impact checks: 65-70% maximum loan-to-ARV (so you can sell the property and recover principal even at a discount), 30%+ borrower equity in the deal (skin-in-the-game), and verified borrower track record on prior flips.
Secondary Market For Private Notes
Performing private money notes can be sold to other private lenders or institutional buyers at small discount (typically 95-98 cents on the dollar). This creates liquidity if you need capital before the borrower's planned payoff date.
Source: American Association of Private Lenders 2025 industry survey. Last updated: May 2026.