Private Money Lending in 2025: What’s Working & What’s Changing?

Question

Hey BP community,

With banks tightening their criteria and private credit assets continuing to grow, I’ve been digging into how private money lending is evolving — especially in our real-estate investing space. According to recent data, the private credit market is expected to nearly double by the end of the decade, and private lenders are increasingly stepping in where traditional banks won’t. `

Here are some things I’m wondering:

• What loan structures are you seeing more often now (shorter terms, higher yields, bridge & transitional financings)?
• How much importance are you placing on speed of funding and flexibility, vs. yield and underwriting standards? An article noted investors paying 10-12%+ for private money because of how quick and flexible it is.
• For lenders: what are you doing differently now in terms of collateral, terms, or borrower selection? For borrowers: how are you sourcing private money and what terms are you comfortable with?
• With changes in technology and underwriting, are you seeing shifts in risk / return profiles? Some reports say tech and automation are changing the private lending space.

What loan structures are you seeing more often now (shorter terms, higher yields, bridge & transitional financings)?

How much importance are you placing on speed of funding and flexibility, vs. yield and underwriting standards? An article noted investors paying 10-12%+ for private money because of how quick and flexible it is.

For lenders: what are you doing differently now in terms of collateral, terms, or borrower selection? For borrowers: how are you sourcing private money and what terms are you comfortable with?

With changes in technology and underwriting, are you seeing shifts in risk / return profiles? Some reports say tech and automation are changing the private lending space.

Would love to hear from both private lenders and investors who borrow or use private money — what are you seeing, and how are you adapting?

Mike Klarman · Answer

You really want a LOC with someone, not really a private lender. You wanna work autonomously on the choosing/valuing of the asset and just draw down on the LOC when needed. That's the ultimate and best way. Institutional private money is really no different than Hard Money except maybe they can close a little faster but sometimes it is a title issue and you can't anyway.

The absolute best is, educate yourself to the 9s. Get a RE license, become a hard money officer, learn the GC trade, wholesale trade. Get yourself the knowledge base and network to do this right and then you scout out your personal life and you'll definitely find someone who has 100k - 200k sitting idle or sitting and making like 3% - 5%. If you operate optimally, you know you can safely offer them 10% APR for access up to 200k when needed.

Now you can buy at auction, short-sale, direct from seller, you can close in 7 days, you can close in 1 day. The 200k line costs you 1,666/month. But offers unbelievable freedom. The daw process with lenders can really throw the project into a tailspin.

Private Money Lending in 2025: What’s Working & What’s Changing?

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