Private Money Lender ROI Calculator
Private money lenders fund real estate investor deals at 10-14% interest plus 2-4 points origination. Total annualized yield typically lands 12-18% — far higher than traditional bonds but with default risk that must be priced in.
Private Money Loan Structure
Typical structure: 12-month interest-only loan at 10-14% rate plus 2-4 origination points. Secured by first deed of trust at 65-70% LTV (loan to value) or LTC (loan to cost) on the underlying property. Investor pays interest monthly with principal balloon at term.
How Points + Interest Combine
Points are paid upfront and compress the actual yield. 11% rate + 3 points on a 9-month loan = 14.7% APR (3 points / 0.75 years = 4% additional yearly yield). Longer loans dilute points; shorter loans amplify points. Most private lenders structure for 6-12 months to maximize yield.
Default And Loss Severity
Industry default rate 2-5% annual. On default, lender forecloses and sells the property. With 70% LTV, lender has 30% equity cushion — typically full principal recovery plus accrued interest. Foreclosure cost averages 4-8% of loan balance, eating into upside but rarely creating principal loss.
Source: AAPL (American Association of Private Lenders) Industry Survey 2025. Last updated: May 2026.