Private money lending

[Marilyn Bredar]

I'm new to RE investing!  I have an opportunity for private money lending.  What would be a reasonable rate of return?  Also, is there any downside to my borrower stretching out for 20 plus years.   I'm so grateful for any and all responses.

[Malcomb Stapel]

Quote from @Marilyn Bredar:

I'm new to RE investing!  I have an opportunity for private money lending.  What would be a reasonable rate of return?  Also, is there any downside to my borrower stretching out for 20 plus years.   I'm so grateful for any and all responses.

 Reasonable rate would depend on your goals. But for short term 1 year or less you could be anywhere in the 10-15% range depending on the deal/risk. Research predatory lending rates and make sure you don't break any rules going too high. As for your second question, yes, 20 years is too long unless it's some sort of slam dunk deal that you can live off of the interest and you don't need to invest the money elsewhere. 

Think about your money as more transactional, you are lending it out, and you want to see it back in 12 months or less with X amount of return. Your time value of money is important here.