EP 229: Private Money Lending Gone Wrong: Horror Stories, Due Diligence, and Getting Your Money Back

FinancingProperty ManagementBehind-The-ScenesMid-Term RentalsLong-Term RentalsShort-Term RentalsThe Community
Written By Amelia McGee
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This week, we sit down with investor Kasey Hilgers and unpack the dark side of private money lending. We walk through how Kasey’s very first deal—a $30K second-position lien on a nearly finished flip—went sideways when the borrower failed to refinance and her money was stuck for years.

We talk about:

  • Why second-position liens are so much riskier and what it means when the first-position lender can wipe us out

  • How scaling too fast, sloppy bookkeeping, and “robbing Peter to pay Paul” put our capital at risk as private lenders

  • The creative strategy we used with a DSCR lender so Casey could take over the property and claw back her $30K

  • How we underwrite now: vetting both borrower and deal, insisting on a recorded promissory note and deed of trust, and avoiding “silent seconds”

  • How we decide how much we can emotionally and financially afford to lose on any one loan

We wrap by debating what matters more to us as lenders—a great deal or a great borrower—and how that answer has evolved.

Resources:

Amelia McGee
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EP 228: Should Real Estate Investors Create a Rental Management Company?