Private lending — also called hard money lending or private money lending — is one of the most straightforward ways to invest in real estate without owning or managing property. Here's how it works in the context of San Antonio residential deals.
The Basic Structure
As a private lender, you provide capital to a real estate investor (the borrower) to fund an acquisition or renovation. In return, you receive:
- A fixed interest rate on your capital (typically 8–12% annualized for residential deals)
- A promissory note documenting the loan terms
- A deed of trust recorded against the property — meaning your loan is secured by real estate
The borrower repays the principal plus interest at the end of the loan term (typically 6–18 months for a fix-and-flip or BRRRR deal).
How Your Capital Is Protected
The primary protection for a private lender is the loan-to-value ratio (LTV). At Summit Impact Partners, we never borrow more than 70–75% of the after-repair value (ARV) of the property. This means if a property is worth $300,000 after renovation, we won't borrow more than $210,000–$225,000 against it.
That 25–30% equity cushion means that even if the deal underperforms — renovation costs run over, the market softens, the exit takes longer — there's a meaningful buffer before your principal is at risk.
Additional protections include:
- Title insurance at closing (your lender's policy protects your lien position)
- Property insurance naming you as additional insured
- First-lien position — you're paid before the borrower in any liquidation scenario
Who Private Lending Works For
Private lending is well-suited for investors who:
- Want passive income without property management responsibilities
- Have capital in a self-directed IRA or Solo 401(k) looking for real estate exposure
- Are accredited investors seeking higher yields than traditional fixed income
- Want deal-by-deal control — you review and approve each specific transaction
What to Ask Before You Lend
- What is the LTV on this specific deal?
- What is the ARV based on, and can I see the comps?
- What is the renovation scope and budget?
- What is the exit strategy — resale or refinance?
- Who holds the title insurance and deed of trust?
We answer all of these questions in writing for every deal we bring to capital partners. Learn more about partnering with Summit Impact Partners or reach out directly to discuss a specific opportunity.