When it comes to building wealth, most people think about grinding away at their day jobs, stashing cash in retirement accounts, and hoping the stock market smiles kindly on their investments. But what if there was a smarter, more strategic way to make your money work for you, so effortlessly, it feels almost unfair?
On a recent episode of Raising Private Money with Jay Conner, private money expert Rich Lennon shared his journey and the powerful lessons he’s learned about growing wealth as both a real estate investor and private money lender. If you’re looking to make your money work smarter, not harder, here are the key takeaways from Rich’s fascinating approach.
The Shift from Busy Investor to Effortless Lender
Rich’s story is one that many investors dream about. After spending years as a full-time real estate investor—flipping four to five homes a month—he decided to pivot in early 2020, right as the pandemic hit. He’d reached his financial “magic number,” felt burned out by the daily grind, and recognized that lending money to other investors was not only less stressful but also more profitable and less time-consuming.
Today, Rich manages over $8 million in private loans and works less than five hours a week. The secret? He stopped being the one swinging hammers and started being the one providing the capital—the backbone of every successful real estate deal.
Why Private Lending Makes Sense
Private lending is all about putting your money to work for you. Instead of seeking out, purchasing, renovating, and selling properties yourself, you provide the funding for other experienced investors to do the heavy lifting. Rich’s lending model allows him to earn double-digit returns while enjoying a much lighter workload. Just three hours of due diligence per deal—mostly underwriting the property and paperwork—yields returns that rival or exceed what he made flipping properties himself.
How Rich Minimizes Risk
A key pillar of Rich’s strategy is underwriting based on the asset, not the borrower. He relies on rigorous, asset-based criteria, typically lending no more than 70% of a property’s After Repair Value (ARV) minus repairs. This conservative approach protects him if a borrower defaults, since the underlying real estate is usually worth more than the amount loaned.
Rich has also embraced technology by leveraging Artificial Intelligence (including ChatGPT) to analyze comps and value properties. According to him, AI is now just as accurate as human analysis for determining ARVs, which speeds up his process and further reduces his risk of error.
Unlocking Massive Returns with Private Money
One of the most remarkable aspects of Rich’s model is how he combines his capital with what he calls “lazy money”—funds from passive investors looking for solid, predictable returns. Here’s how it works: if a borrower needs $200,000, Rich might put up $100,000 while another investor provides the other $100,000. He then lends out the total at 20% interest to a flipper. He pays his partner a flat 10% return, keeping the remainder for himself. The result? His money often earns a 30% annual return, while his partners enjoy passive income with little involvement or worry.
The Power (and Simplicity) of Self-Directed IRAs
Rich also teaches investors how to supercharge their retirement savings using self-directed IRAs. By flipping or funding real estate deals within a tax-advantaged account, investors can grow their portfolios exponentially faster than traditional stock market investments allow. While there are rules to follow, the key advantage is that all profits compound tax-free, allowing even small accounts to snowball rapidly over time.
Final Thoughts: Action Drives Wealth
The ultimate message from Rich Lennon is simple but powerful: take massive action and let your money move. Whether you’re tired of riding the stock market rollercoaster or you’re looking for ways to scale your wealth with less hustle, the world of private lending offers real opportunities. As Rich says, having the courage to use other people’s money responsibly and strategically is what sets wealth builders apart from the rest.
10 Discussion Questions from this Episode:
- What motivated Rich Lennon to transition from flipping homes to becoming a private money lender, and how did the pandemic influence this decision?
- Rich mentions earning 30-50% returns as a private lender. What are the mechanics behind achieving those high returns, and what risks might be involved?
- How does Rich decide which deals to fund as a private lender? What role does asset-based lending play in his underwriting criteria?
- In the episode, AI tools like ChatGPT are used to determine after-repaired values (ARV). How do you think artificial intelligence is changing the real estate investing landscape?
- Jay Conner and Rich discuss leveraging self-directed IRAs for real estate investments. What are some advantages and rules to be aware of when using retirement accounts for real estate deals?
- Rich describes the importance of teaching his children financial literacy and entrepreneurship early on. What are your thoughts on his approach to kids and money?
- What qualities does Rich look for in his “lazy money” partners, and why does he prefer more hands-off investors?
- Rich emphasizes the value of taking massive action and understanding the pivotal role of moving money in real estate. How do you interpret this mindset for your own investing or business endeavors?
- What are the benefits and challenges of building a real estate investing business that requires minimal weekly involvement, as Rich has done?
- After listening to this episode, what new strategies or perspectives might you consider in your investing journey, whether you’re interested in lending, flipping, or growing your retirement accounts?
Fun facts that were revealed in the episode:
- Rich Lennon Uses Artificial Intelligence to Value Properties
Rich shared that he leverages AI, including ChatGPT, to analyze real estate deals and determine the “after-repaired value” (ARV) of properties. He believes AI has become just as accurate as a human expert at picking comparable sales, and it saves him tons of time during underwriting! - He Works Less Than Five Hours a Week—Yet Handles $8 Million.
After flipping hundreds of houses for over a decade, Rich transitioned to private money lending and now manages over $8 million in funds. Believe it or not, he does all this while working less than five hours a week! - Rich Teaches His Kids About Money—Complete with Family Taxes!
Rich didn’t grow up with a financial education, so he’s teaching his kids early by giving them allowances, charging a “family tax” of 50%, and encouraging them to invest or spend what remains. His kids even lend money in some of his deals—talk about starting young!
Timestamps:
00:01 High-Yield Real Estate Lending
05:01 Efficient Deal Management Strategy
08:19 Asset-Based Lending Strategy
11:47 Understanding ARV in Real Estate
14:33 Growing IRA Through Real Estate
17:53 Richmond Loan Strategy: 20% Interest
21:00 Ideal Investor Profile: Seeking Stability
23:37 Connect with Rich Lennon:
24:28 Teaching Kids Financial Responsibility
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