Become A Private Lender With Keith Baker

Episode 487: Become A Private Lender With Keith Baker

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REIS 487 Keith Baker | Private Lending


Private lending is not a get-rich-quick strategy. Don’t expect to be a millionaire in your first year as a lender. It’s slow but steady, and it’s a business that you can build over time. Learn how all about loaning with your host, Mitch Stephen and his guest Keith Baker. Keith is the host of The Private Lender Podcast. He teaches new private lenders how to stay safe when dealing with private money. Learn how to handle your money and other people’s money the smart way. Find out some new tips and tricks Keith teaches his students about private lending and more. Join in today if you want to be a private lender.

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I’m here with Keith Baker and we’re going to be talking about how to become a private lender and all things related. I’ve often thought, “What a great way to start a business even if you’re young,” because you can loan on about anything. You can start with any amount of money. It’s a business that you could build over time. If I’d have been in the loan business starting when I was twenty, by the time I was 35, I’d probably be a multi-millionaire because I would have started out loaning on little things.

I would have learned about the importance of collateral and the ways of the world. When I say that, I know that people make a lot of promises they can’t keep or they’re not going to keep. We have to have backups to backups, plan B and a plan C so if things don’t go as they’re supposed to go, we still can get made whole and move our business and our retirement plans forward. I like this topic. I’m going to introduce us to Keith Baker. How are you doing, Keith?

I’m doing well, Mitch.

How long have you been loaning private money?

Not long enough. I’m not a multimillionaire from lending. It’s a funny story. I learned about private lending through self-directed IRAs in about ’08 and ’09. I began my education but didn’t start. It took me three years and being the fly on the wall in the back of the room until I started voicing up and meeting people that could use my money. Their track record said they had a pretty good chance of keeping my money safe. In 2012 and 2013, I started coming into getting, “We can use the title company’s attorney. That’s no problem as long as you’re happy with the docs.” All those stupid young mistakes, fortunately, didn’t hurt. I didn’t suffer from them but I did learn that if that attorney that works for the title company, drafts my documents, the title company is his client, not me.

2014 and 2015 was when I started kicking it into high gear and met a student of yours. When one of my borrowers flipped his model to wholesaling, he turned me over to Landon and said, “Do you know the Mitch Steven Method?” Long story short, I still have notes out there with Landon. The note comes due but it’s steady money every month. We’ll get to an extension at some point. We’ll keep it out there. That’s how I got into it and how long I’ve been doing it.

In 2018, I launched the Private Lender Podcast, which was simply to help people stay safe. I found that there are a ton of gurus that’ll teach you how to raise private money, where to find private lenders but nobody was out there telling the private lender how to stay safe. I look at a private lender as the pretty girl on prom night. My day is going to tell me whatever I want to hear to get my money. The whole point of the podcast was to put that awareness and education out there on how to stay safe. Private Lender Academy is doing the same thing, teaching people the basics. I like to look at this as a NASA operation. We’re going to have triple redundancy in our systems. We’re going to start with LTV. That’s our first backstop to make sure that we’re not overloaning on the property.

LTV is for the Loan-To-Value. You’re loaning a certain amount of money on what value of property because you’re going to have a lien or you’re going to take that property as collateral. What’s your risk? If you’re loaning $100,000 on a $1 million property, that’s not much risk because you’re either going to get paid $100,000 or you’re going to get the $1 million property. You can work that loan-to-value in your favor and you decide, as the private lender, how much risk you want to take. If the guy wants a $70,000 on $100,000 house and you think that’s not enough room then tell them you only give them 60% or $60,000 on it.

It’s so the audience knows, I’ve had a private lending company since 2005. Raymond Braun and I started a private lending company because I had so much private money that I couldn’t find enough deals that met my criteria to get it out. If I didn’t get these people’s money out, I would lose their money and they would move on. Unfortunately, when I would call them back and say, “I’m sorry, it’s been so long. If you still have that money, I’m ready to use it,” out of all the people that told me, “No, I’ve moved on,” half of them have lost their money into the decision that they made. I had set the bar high with the interest that I wanted to pay them so they were out trying to find something other than me that would meet that requirement. Usually, when you start getting paid 8%, 9%, 10% or 12%, the risk of your position, whatever you’re trying to do with your money, goes up. Normally, the risk is associated with higher rates of return. The higher the rate of return, the higher the risk.

Even the people that I talked to did not know that they had lost the money yet but I was pretty sure they had lost the money when you said, “May I ask what you did?” They said, “I loaned it to Uncle Fred in Alaska for a snow cone factory.” I said, “Did you get the first lien?” “No. We did a handshake deal.” That money is probably gone. I was not only doing the money so that I could keep it out in the wings. Hard money lending or money lent to investors is usually short-term. They want to buy it, fix it and flip it. When the flip ends, you get your money back.

I was doing 6 and 8-month loans keeping the money that I couldn’t get to making some money for my private lender. I would always borrow the money directly. I was always the borrower. I never sent them to anyone because that would be risky. I would borrow the money directly and my company would loan the money and be the first lien holder to whoever we decided to loan to. If there were any problems, we always made the payment and we would go collect the collateral because we know how to collect the collateral and we knew what to do with the collateral with whom we got it. We know what to do with houses in real estate when we foreclose on them.

We also knew the most important part. We didn’t loan any more than we wish we would have bought the place for. We always got to figure that when we’re making a loan that we’re going to end up owning that place. That’s what you got to figure out. I don’t want to own it. I’m not in this business to go yank the rug out from under people and take their properties. The whole nature of this business is you either get paid or you don’t. There are only two things that can happen.

It’s binary.

I wanted the audience to know I’ve been learning for a long time. For me, it was a way to keep money that I couldn’t get to yet moving.

A private lender is like a pretty girl on prom night. Her date is going to tell you whatever you want to hear. Share on X

In those 6 to 8 months when something else came up for you, now you had that lender’s money that you could put to work in your system. People ask me all the time how come I don’t do the same thing. I’m coaching and teaching private lenders. It’s simple. Brokering deals and loans is a job. I already have enough of those. I don’t need anymore but in your case, it was almost this wonderful necessity that if you did a little work now, the fruits of that labor would not only would you get paid for your time and in the meantime but in the long-term, you would be able to use that money for your deals.

Let’s talk about the dynamics. I want the people out there reading. You’re considering being a private lender as a business. If you’re out there and you want to consider that as a business, here’s how it worked as a business for me. I was borrowing money for 6%, 7%, 8% and I was loaning it out at the maximum amount allowable by law. I was loaning at 17.9%. What it looked like was I was loaning it out at 14% for six months. If they could do their flip in six months, it was 14%.

It’s not bad because a lot of these flips only last 1 month, 1.5 months or 2 months. It’s 14% annual interest. They were only paying a fraction of that 14% when they flipped the house. If they wanted an extension, it was $2,000 every six months. It got up pretty much close to 18% if they kept needing extensions. I got people that extend every six months and they’ve been doing it for years. Whenever I needed the money, I could call them and say, “This is the last six-month extension.” I’m thinking to myself, “I need that money now because I’ve got all the other money placed.”

I do seller financing. When I buy a house, I seller-finance my buyer at 30 years fixed at 10%. That money is out for a long time. My money doesn’t go in and out like a flipper’s money. Got it in the house, fix it up, flipped it and got the money back. My money will be out for however long I can borrow it for my private lenders. I can borrow it for fifteen years. It’s going to be out a long time. I have to continually keep increasing the amount of money that I have. Right before COVID, I had $26 million on the street that on the first I had to make payments on $26 million. It was okay because I was owed $42 million and they had to make payments to me at 10%.

My point is I was borrowing money to 8% and I was loaning it out at 18%. I was making 10%. Don’t split hairs with me on user or anything but I was making 10% on money that wasn’t even mine. I was earning it because I was advertising for borrowers. I was talking to borrowers and I was going out and looking at their properties and research and to make sure I even wanted to loan on them or the property. It’s twofold. I didn’t want to take anybody as a borrower because the deeper you get in with shit asses, the more shitty things happen.

If you don’t like the person right off the bat, let’s move along and let’s find a better caliber buyer. It’s easy enough to learn who people are. I don’t necessarily loan to newbies but that’s not true. If I knew a newbie that knew what he was doing and had some life skills that would pertain to this, I thought he had it going on, plus, he only needs 50% of what the house is worth. The guy’s got a lot of cushions. That’s what I was doing. I ended up being in the hard money loan business loaning other people’s money out and making the arbitrage between the interest rate that I owe and the interest rate I was collecting. I was making the arbitrage and that turned out to be a pretty damn good side business.

I know that it takes years for that company would profit $7,000 or $8,000. It wasn’t a full-time gig. I was only doing it for self-preservation so I could keep the money in my court. I still ended up making some pretty good money. I was splitting that with my partner. At one point during 2008, 2009 and 2010 recession-era time, I picked up 40 or 50 properties that I wish I would have bought in the first place. I wasn’t able to buy them because somebody else found them before me but I ended up with them during the recession by circumstances. Does that sound like how you do it?

You made a good distinction there. There’s a thick line between hard money and private money. I was not smart. I didn’t do things the right way. Having parents that were born in the Depression, education was everything so I always laugh and say, “I had fourth-generation immigrant parents.” That was the education route. A little background, I always say that I will always be middle class. I had grandparents that were sharecroppers and had nothing, not even the land that they worked. I had a grandparent who was a medical doctor and the other the president of the Oklahoma State School Board but both had amazing worth ethics and they had entrepreneurial spirits on both sides of the family. I’m fortunate from that aspect.

Going to college, I’m going to study what I love. I double-majored in Philosophy and German. My mother cried. She teared up when I told her that this is what I was going to spend thousands of dollars and years pursuing. The joke in the family is I was studying to be unemployed. With the work ethic I had, I started working in construction and parlayed that into working on oil rigs in South Texas and backwaters of the Gulf of Mexico and Louisiana. I had a nice 401(k) when I left the oil field and turned that over into a self-directed IRA. The biggest negative I have as a private lender is I quickly ran out of my own money.

Anybody is going to run out of their money. It doesn’t matter who you are. If you’re only good at selling your business, finding houses, borrowers or whatever, you’ll run out of your money unless you’re some prince of Arabia or something that has an endless number of oil wells that keeps on spitting out money.

An oil spigot that they turn the tap and go sell a few barrels and say, “Let’s go get a new Mercedes.” For me, it’s my money and my terms.

You’re only loaning your money?

Correct. Also, training folks to loan their IRAs, 401(k) or inheritances. They can even borrow from their life insurance policies if they’re set up properly to loan money out. Also, to your point, play the arbitrage. I pay 4% of my life insurance policy loans. I can loan that out at 12%, easy. That’s what I do.

Be your own bank. The only reason why the be-your-own bank system didn’t work for me is I know how to make too much money with my money buying houses and seller financing. I’m making 20%, 25%, 30% of my money. It was more logical for me to go find private lenders that wanted me to lend my money and go straight to the 30%. I put my effort there to find the private lenders.

Your model is using private money for your deals. I can see where the be-your-own bank wouldn’t work for you. The volume that you do is not robust enough.

REIS 487 Keith Baker | Private Lending

Private Lending: Don’t loan any more than you wished you would’ve bought the property for.


Anybody who knew what to do with their money whether you’re selling cars or whatever, if you know how to make more than 4% or 5% with your own money then be the banking system may not be for you. There’s a lot of nuances. That’s a huge subject. We’re not going to cover that.

We got my kids on the policies strictly. In twenty years, there’ll be enough accumulation where they have something. Whereas me, my policy is a few years old. I’ve only got a few tens of thousands that I can loan out of it that I have accumulated. I love the bank on yourself system. I don’t regret it at all.

It’s a place in time for the right person in the right situation and the right mentality. I’m borrowing private money and I’m loaning it out as a hard lender. I’m borrowing it cheap. Hard lenders are traditionally more expensive. What you’re trying to do is teach people how to either size someone like me up and make the 8% or learn to go ahead, skip me, go direct and make 12%, 13%, 14%, whatever you can make.

To originate their own loans. That’s my goal.

I’m a little more passive. Once you like me, you loan me your money. You don’t ever hear anything but checks hitting your mailbox because I do everything else. I go find the buyer, the lender and I handle the foreclosures. You’ll never know what happened. My house burns to the ground and you’ll never know it and it has happened before.

I tell people when they become students of mine, “You’re not going to be driving a Ferrari and dating a bikini model in a year. This is not get-rich-quick. This is slow and steady wins the race. You can make a lot of money in private lending or hard money lending if you want to go that route. It all depends on how passive is passive. How passive do you want to be?” I love the numbers of the 12% and 15% six-month flips but I’ve got to work on money more often.

That’s where I come in as a choice so people like me can have a choice. I’m paying 7%, 6% or 8% but you don’t have any work. If you want to make 12%, 13%, 14%, 15% or 16% return then you’ve got to go find the borrowers. You got to size them up. You’ve got to make sure the payments are collected every month. You have to send the foreclosure notices if they’re not paying. You have to hire an attorney if they’re not paying. You have to take the property back. If you do get it, you have to figure out how to sell that property to get made whole. If they’re listening to you and/or me, they probably will make a lot of money when you get your property back. You’ll probably have a little coup there, a cash injection. You’ll probably leap forward in your retirement plan if you ever get the house back and if you’ve done it how he’s telling you how to do it.

If you do it right up front, which is the plan for the worst, reverse engineer your note and your terms beyond that. The house could burn down, to your point. There are insurance policies for that. I’m a lender and I’m the mortgagor as a private lender. If that house burns, that borrower won’t get any money until I release it if there’s a claim. I can get paid whole.

You’re going to be dealing with it.

To my point, that becomes an asset in my self-directed IRA. What I would do is I would look to owner-finance it myself, put it right back out on the market, create a note, resell the note and recapitalize it. It would maybe take a second for cashflow.

To get your money back, all you had to do was walk into any Real Estate Club USA and go, “I loaned this amount of money to the poor so and so and he got killed and hit by a train. I want my money back.” If you’ve made the loan right, there should be a fistfight in the hall and they’ll be a little bit of blood on the check whoever cuts it but it’s okay. You will get paid whole. If you go a little further and do the work and list it with an agent and everything, you’ll have a financial uptick in your IRA that’s pretty substantial because you’re going to make some high rate of return on that.

Never trust the borrower. That was one of my early mistakes. One of my mistakes was trusting a borrower who was a friend of mine.

That’s how it always happens.

It’s always a friend.

Don't lend money to friends or family. Give them what you can without the expectation of it coming back. Share on X

Also, family.

One of my core values is I don’t lend money to friends or family. I give them what I can without the expectation of it coming back. When you’re on a plane, what do they tell you? They tell you to put your mask on first. I’ve angered some folks but they’ve respected it in the end.

I have this big rule too and I also sell houses to people on payments. I don’t want any one of my friends, I won’t buy a house from my friends because I’m buying houses to make money. I won’t sell a house to my friends because there’s a chance I might have to take that house back to protect myself, to put my mask on first. I always ask myself, “Do I have what it takes to foreclose on this person and yank this house out from under them if they can’t make the payments?” If the answer is no, which is usually friends and family, for everyone else, I’ll do what I got to do. I don’t deal with friends and family because I can’t win. The only way I could win is if they do what they say they’re going to do.

You can’t write this down enough times. You have to plan for the worst-case scenario. If you can live with that within the parameters of your loan or whatever business strategy you’re trying to do, if you can live with the worst-case scenario and not collapse under it then go in. Everything else is an upside. When I look at houses to buy, I’m looking at the worst-case scenario. I’m always asking myself this question, “If this house catches on fire, where is the backdoor and how do I get out of it without burning up with the house?” If there’s no back door, I’m not doing the deal. In this case, that is high LTV or whatever you think is good. Where do you roll your money at? What LTV do you loan at?

I like to set it at 65%.

That’s exactly what I meant. Maybe through osmosis, Landon transferred that number to you. That’s where I’m at.

Landon owes me a lot of money. We’ll say that. It was his first payment to me on my first private loan to him. I made it to him in June and July 1st was the date the payment was due. It was July 5th or 6th. I’m sitting in his office and I was like, “Landon, what’s today?” “It’s July 5th. It’s a Wednesday.” “I made a loan to you last month.” He was like, “I didn’t pay you?” After that, he gave his checkbook to his wife and I’ve been paid on the first every month ever since.

That’s usually when there’s a problem. The new loan doesn’t get into people’s systems. It’s always the first month. If we can get the first month then it’s good after that.

I thought it was hilarious. I was like, “This is not good, Landon. This is not how we build a business relationship.”

You were busting him. Why 65%? The obvious answer is it’s enough room for you to get made whole if a lot of things go wrong. I will take it a step further, which is something you’ve said that you’re not doing. You’re not borrowing other people’s money, let alone loaning it out. You’re loaning out your money. 65%, other people feel good going in it. I could borrow other people’s money and loan it out. They felt good at 65%. For me, the most I will buy is a house for 65% of its value. The most I will ever ask my private lenders to loan me is 65% because I feel like it protects everybody. That number is low enough, that LTV, Loan-To-Value, is high enough that everyone should be able to get made whole.

My scenario is a little bit different than yours. What I want to point out is one of the reasons I picked 65% is because other people feel good about that number too. They have money in their IRAs, they want to get it out but they don’t want to do any work and they’ll loan it to me and 65% is the highest or the most that I’ll go in. I averaged 58%. Let’s talk about a little tip that I’m sure you’re using. If you’re not, it’ll be a good nugget but I’m sure you are. I had a lot of people coming in wanting 70% loans because there’s a lot of companies out there offering that. They’re cumbersome.

That’s your standard hard money loan.

I would say, “How much do you want for the rehab?” They say, “I want to borrow $50,000 to buy the house. I need $20,000 for rehab. It’s a $100,000 house.” I said, “You want $70,000 on $100,000? That’s 70%. That’s over my limit. How’s your credit?” Sometimes, I would know because I’m looking at it. I say, “You can get a 0% interest credit card. Why don’t you do your rehab on your credit card and pay nothing? Take that $20,000.” Now I’m only going in $50,000 on a $100,000 house and the house is getting fixed up nonetheless but it’s getting fixed up with his money. How I’ve gotten my number down to 58% is by teaching people not to borrow the rehab money from me. Borrow the rehab money off your 0% introductory offer credit card and keep me out of that. I don’t have to go out and look at the draw schedule and all that.

I do a few rehab draws. I like the owner-finance model. There are games like poker that take a while and there are games like craps where one roll of the dice and you’re out. I look at it the same way. The best deal I ever did was my first commercial deal. No rehab. It was a guy I was loaning to on a single-family residence side of things. He was wholesaling. He got a bite on this little L-shaped commercial building that was a Mexican restaurant and was a convenience store. It had schizophrenia as to what it was.

REIS 487 Keith Baker | Private Lending

Private Lending: Private lending is not a get-rich-quick program. Slow-and-steady wins the race.


I go and take a look. I’ll never forget it. I bring my kids with me. They’re young and there’s broken glass everywhere. I’m yelling at them to stay away. I put them in the car. I was nervous because it was simply my first commercial. It was in a part of town that I wasn’t familiar with. I said, “How much do you want?” He goes, “I’m looking for $70,000 for six months. I want to pay 8%.” I was like, “I don’t know about that. I don’t know any commercial appraisers. I hadn’t put that in my wheelhouse. I’m doing single-family.”

We found a neutral appraiser. I told him, “If this thing comes back at a $150,000 appraisal, I’ll loan you the $70,000. That’s enough cushion for me. That’s a little under 50%.” It turns out that the property was appraised at $305,000. I had a 23% LTV on that property. The day we closed, I called the borrower and I said, “You don’t have to pay me a dime. I will loan to you again. If you keep bringing deals like this at 23%, you don’t have to pay me. I’ll take that all day long.” He paid me as agreed on time. Unfortunately, he cashed me out. What he did was he sold that. He got me out, got a commercial paper in there on the first lien. I wrapped the note and sold it to a lady who at 1.5 years into it, got in a fight with her boyfriend and decided to walk away from it. He got the property back with the restaurant in it.

When you don’t have millions upon millions in your IRA, you can sit around and ask for 40% because someone will come by and want 40% on LTV. They have a massive property with a massive value but they don’t need a whole lot of money. They need to put their daughter through one last year in college or something. Whatever the reason is they need the money, they’re going to pledge this beautiful piece of collateral. If you only have $100,000 in your IRA, you shouldn’t have to loan it 65%. Somebody out there wants a 40% loan or a $400,000 or something like that. If you don’t drive your rate too high, you’ll find them pretty fast.

One of the things about me being able to charge 18% a year on my hard money was because I didn’t have that much of it. I understand if you’ve got billions of dollars in your bank and you’ve got to get out billions of dollars or hundreds of millions of dollars, you’ve got to get competitive because that money’s got to be going out all the time. When you have a little bit of money, you can set 50% LTV, 45% LTV. If you scream loud enough that you have this money but these are the terms, someone will show up and take the little bit of money you have, get it in and it’ll be out.

As long as that property is free and clear, we’ll do it all day long.

There is such a thing as Loan in Seconds. We probably don’t want to get way into it. If there’s only $20,000 in a first lien on a $500,000 property, I’ll loan $100,000 on it because I’ll come up with $100,000 and the $20,000 and I’ll clear it up. It’s all the same thing. If you’re loaning money in the second position, the value of the collateral has to be sufficient for what you’re loaning and for what the first is owed. Also, you have to have the wherewithal to be able to clear it all up if you’re going to protect your position. That’s a whole other story.

I teach from cradle to the grave. With the launch of the Academy, it’s no seconds. Talk to me offline and we’ll look at it. From a teaching perspective, there’s no second position because your money can get held hostage or taken away from you quickly.

It’s a more sophisticated game. Don’t try this at home.

Nonperforming seconds can be lucrative. You’ve got to know how to do them. It comes back to the first two core values of the Private Lender Academy, which are both our ROI. Return of Investment is number one. If I’ve got $1,000 that I’m lending you, I want to make sure my $1,000 is going to come back. I’m going to worry about the return on investment. Is that 8%, 10% or whatever? The core of it is since we’re private lending with our own money, whatever I loan out, I want to make sure I’m going to get back first and foremost.

In a reasonable length of time because it’s out there for a long time.

That’s why we don’t loan in New York state.

The return of your capital should be the primary number one thing. The rate of return is second. If you can get a good return on your capital, you get comfortable with that and get a higher rate of return than you’ve made the coup. That’s only going to happen if you’re doing the work. I’m not saying it can’t.

How passive do you want to be at the end of the day as a lender?

That’s the question. I tell people all the time, “You can make more money than I’m paying but you’re going to have to go to work.” If I’m going to pay 8%, that’s not bad. Banks are offering 1.5% or 1% and I’m paying 8%. That’s pretty good for passivity. They don’t do anything but get the money to me, sign some papers, get the money back and sign one piece of paper called a release. I have a book coming out. It’s called The Art of Private Money Lending. I’m going to give it to my private lenders who are considering me or would like to know how this works. I might go ahead and recommend that they even take your course to get a little hands-on or a little deeper into the ins and outs if you’re serious about this.

I also think that you would be great for anyone who wants to start a side hustle and doesn’t know what to do. This is a great business for a side hustle. You’ve got a job that’s bringing the bills even if you don’t have any money. You could learn to get OPM and loan it out. I would prefer that if someone was going to borrow OPM and loan it out that they go through your course. To lose your money is one thing, to lose someone else’s money as a whole different ballgame. I’ve often said, “I can lose my money but I’ll die before I lose your money.” I’ve only got one reputation.

As humans, we're either headed into a crisis, in a crisis, or coming out of a crisis. Share on X

You’ve been around real estate and coaching a lot longer than I have and there are bad apples and they’re all over Instagram. It doesn’t matter what industry you’re in. It could be car sales, there are always some bad apples. To your point, you asked me if I am loaning out? Am I making the arbitrage in my hard money lending? No, not right now. This reflects in my own lending. Valuations are a little cuckoo. We’re not going to have a great recession or anything but there will be a market correction. When there is, a lot of people are going to get shaken out.

There’s always a market correction coming. I went to this mastermind and they had a unique philosophy that I didn’t like but it was true and you couldn’t argue about it. As humans, we’re either headed into a crisis, in a crisis or we’re coming out of a crisis. There are only three cycles. The crisis is how we function. This world is built on one crisis after another when you think about it. The same thing with economic cycles, we’re either headed to a downturn, in a downturn or we’re coming out of a downturn. Coming out of the downturn has been about the longest, prolific time of prosperity that anyone remembers. I don’t know if there’s been a long time of prosperity between recessions.

If you weren’t born at least in the 1980s, you have no idea of it. I remember Houston in ’82. Strip mall after strip mall and house after house being foreclosed on.

You always got to figure you’re heading into a recession. I’m constantly planning my business for the next recession. Until then, that’s all I knew to plan for. Who would have thought of COVID? Luckily, COVID and recession had huge differences but everyone’s reaction was all the same. My business models were built to withstand the recession and because they were built to withstand a recession, they did withstand the problems of COVID both on the lending side and in my house buying and selling side.

I will still lend, don’t get me wrong. I’ll help the other people put their money together. Bring me a deal. Let’s start there.

You are probably not going to loan 70% on the sales price when people pay $100,000 grand over the asking price.

Absolutely not. My point is there’s going to be some co-lending opportunities coming up with students and whatnot. I’m not out there trying to get money for my own deals necessarily, although I’m finding out that it could be a moneymaker for me and that may be a job that I want to look into. My point is to help people draft up quality loans. I prefer to hold them until the end because you make the most money. If they need to sell the note, sell a partial or whatever they need to do but make sure they do it upfront properly to where it’s attractive to an end buyer. Whether I’m selling that note or if I’m bringing someone else’s money in, I’m sure as heck not going over 65% with somebody else’s money.

Maybe you got someone who says, “I got $50,000, $60,000, $100,000 sitting around,” whatever the number is and you wait around until there’s a 40% LTV chance for that money and loan out their money with that super advantageous LTV. Until you’re more sure of yourself, don’t even loan it out unless it’s some absurd LTV in your favor.

That’s what I’m finding. People want it done for you at the end of the day.

A lot of the people that have the money are up in years. They don’t want another job and they don’t want to keep track. They’re ready to go play golf or travel or do whatever. That’s why there’s a certain amount of people that appeal that want to loan it to me for 8% instead of doing all the work and making 12% or 14%. I have no bonus. In my book, I’m going to teach people how to do private money for themselves. I’m a choice over here. If I’m a logical choice for you for what you want to do then loan me your money and I’ll pay you 8%. I’ll give you the thing and you won’t do anything to collect checks. If you want to make more money than that, go ahead.

I was noticing in our conversation that we did things almost exactly the opposite. You started loaning your own money and growing into borrowing the money for your own deals or maybe making the arbitrage. I had to go to the arbitrage and borrow for my own deals out of necessity because I was finding so many deals and I couldn’t fund them out of my pocket at all. I’m getting to the point where if I loan out my money to someone like me out there, I’ll be fine and I’ll buy some of my time back.

That’s what it’s all about. I’m a few years away from crossing the other half-century mark, which means that my social life is filled up with more doctor visits, blood tests and blood panel than I care to. I’m out here working a little anyway so why not come in with me? I’ll do the upfront work kind of thing. I didn’t want another job but if I’m going to be lending, I might as well be lending other folks’ money and teaching them how to do it. More importantly, teach them how to be safe. We know real estate investors are passionate, creative and persuasive people. They also happen to be extremely cheap. I’m saying that out there to the universe.

They can be a bit devious. Some of the meanest and most deceptive personalities I’ve ever seen were in this business. I saw a lot of people that are not predominantly that way. That’s why I say you need to look at someone’s character the best you can because if they don’t have good character, it’s not fun to loan your money wondering what this guy’s up to. One of the things I do when some people loan me money is I say, “Call the 59 people that I’ve owned for the last 30 years or so that I’ve sent payments to. Call them first because I don’t want you lying awake at night wondering what my motive is. Let’s get this out of the way first.” On the other side of that, if you’re going to loan money, let’s get their character out of the way first. Is it someone you want to loan money to or not? If the answer is no, move along.

I’m going to use you as an example, Mitch. What I teach are the three P’s, the Person, Process and Property. I don’t even look at the property unless I want to loan to that person as their character. People are going to give you positive references. I realized that going into this. First off, you’re an investor in the San Antonio, Texas area. That’s the first thing I know about you. You’ve done this before. You’re repeating the same process over and over again. It’s not like you’re a landlord and you go, “I want to start flipping.” You know this is your lane, this is the way you’re set and this is your process. You’ve been doing it a long time. What I like is you’re a coach, a personality in the real estate space. That alone adds credibility. You’re not going to do something foolishly that’s going to harm your reputation. We only get one. When it comes to other people’s money, you get one chance and that’s it.

REIS 487 Keith Baker | Private Lending

Private Lending: If you’re lending someone a thousand dollars, you want to make sure your thousand dollars is going to come back.


In your case, I’m looking at your experience. I know your students and I know what you teach. I’ve talked to some folks and Mitch has never missed a payment. It turns out the borrower missed but Mitch paid back and did what he needed to do. You keep it passive for me. Landon likes pushing work off onto me but I’m like, “No, I’m the lender. You do the work. You’ve got the staff to do this.” “Do I want to lend? Yes or no?” It’s a binary thing. “Yes, I will loan to Mitch.” What is Mitch’s process? You’re sticking to the same one over and over again. “Good. He’s done this before. It’s not his first rodeo. I like that. What’s the property look like? What’s the collateral to my money? If everything goes tits up, what am I going to get?”

I look at a property and I don’t run credit. I ask people to run their own. They’d go to Credit Karma or whatever and get a soft hit. I do take their social in case they don’t pay me because if I loan to an LLC, I do have a personal guarantee. The bottom line is I’m not going to run your credit and I’m not going to ruin your credit unless you try to ruin me first. I give the borrower the benefit of the doubt. I will report to the credit bureaus if I have to.

By and large, it’s that property. Is it a $100,000 house? Am I loaning $50,000 or $60,000 on it? I’m looking at deals coming across Facebook. One, they’re daisy-chained wholesale leads. By the time I’m getting them, they’re at 80% to 85% LTV. I tell people like, “I don’t care what the comps say right now. What did the comp say right before COVID? Where were we right before COVID?” That’s going to give you a better value of the home on after repair value than someone who is paying $100,000 overappraisal on the retail side of things. Not to say go with that 2019 number.

What was it worth before everything else?

I’m sure it was a nice little steady upwards. Depending on what market you’re in, you’re coming in now saying it’s a $140,000 house at best. Just because the market is crazy doesn’t mean it’s going to be there tomorrow. I’m surely not going to base any of my exit strategies on that number.

I wonder if they’re ever going back to those prices. I don’t think they’re ever going back to those prices but it is an interesting number to look at because they can’t keep going where they are. I don’t know how many people are leaving the blue states coming to the red states and never going back because I’ve had enough. It smells like a lot to me. Comal County is the fastest-growing county in the nation like every other quarter or something and they’re coming here like tens of thousands of people every month. They’re coming from blue states that they’re tired of what’s going on.

I was talking to Gary Boomershine and he was looking at Florida, Texas and a few other states to get out of the Bay Area in California and then went up to the Sacramento area and found a community of like-minded individuals. He said there’s a bullet behind every blade of grass and I was like, “I can’t wait to come to visit. It sounds like a great place. It’s very Texas-ish.” I do have a crystal ball and it’s dark. We saw the same thing in ‘08. This is crazy, overbid, over asked purchases. I’m in no rush to put my money out there. I will if the deal is right but I’m in no rush until we get a little shakeout. The banks are already tightening up. They want a higher credit and they’re getting nervous. They don’t want to put bad notes out there. The banks are going to tighten up and that means private money. You might not like my terms but I’ve got money and I can deploy it quickly.

There’s this question out there maybe by some people that are reading. “Who the hell pays 14%? Who’s going to pay 16%? Who’s going to pay 18%? Who’s going to pay 10%? Why would anyone do that?” A lot of times, it’s not the cost of the money. It’s the availability of the money. If you can buy a $500,000 house for $250,000, there’s $250,000 to be made on this property. The problem is and you have to understand why people pay these rates, is you can’t steal houses in slow motion. Usually, if a house is going for 50% of what it’s worth, there’s some back pressure, clock ticking and a door’s fixing the slam on someone’s fingers. You got to get the thing taken care of before that happens.

You reach over and you grab the 14% money, which we are fast. You, me, private lenders are fast. I asked for three days. After you give me the title policy, insurance and whatever things I want from you, I have to have them give me three days. That could happen. In a day, you could get what you want. I’ve closed things 24 hours before because I had to but I don’t like to put myself under that pressure. Who wants to do that?

They become owners of that property with that huge equity and then they sit down, take a deep breath, calm down and they take their sweet time finding some more reasonable money or fixing up the house in a couple of days and selling it to somebody. They’re making a good percentage of that $250,000 equity or whatever. It’s about the availability and the speed on why people pay the interest rates that a hard money lender or a private lender might charge.

You can have this $250,000 in equity at 14% or you don’t.

You lose the deal.

You don’t get that option at all. Quincy Long at Quest Trust has a great saying, “What’s a little usury amongst friends?” If Mitch was willing to pay me 20%, what’s the harm in that? He’s getting his deal and he’s making his $250,000 and paying me my $22,000 back.

The most expensive money in the world would be a partner because a lot of people teach, “Find the deal that has $250,000 or the upside in it and then you go get a partner and the partner brings the money and then you all split.” If you want to convert that to interest rate, maybe they only had the property for 60 days and you gave up half of $250,000.

If anyone’s reading, I’ll do exactly that for them if they want.

Real estate investors are very passionate, creative, and persuasive people. They also happen to be extremely cheap. Share on X

That makes it a lot easier. You get your money twice as fast. I’ll give it to you in ten minutes. I hope we’re answering that question, why do people pay these rates? Why would people pay these rates?

It’s availability.

It’s more profitable to pay the 10%, 12%, 13%, 15% than it is to not get the loan because making a percentage of something is way better than making $0. I live that way for a long time. Here’s a nugget for the people out there. When you don’t have money, you’re a professional deal finder, writer upper. The better your deal is, the better your writer upper you are, which means you can get a contract that gets time or more time or a lot of time before you have to close and get a price that’s good or better or best or outstanding. The better your contract looks, the more time you have then you can walk around town. This private money will find you if you scream loud enough and let them know that you need some help.

If you truly have a deal, the money will find you. Let people know.

At the beginning of my career and the beginning of a lot of people’s careers, you have to understand it’s not about how much money you have. It’s how good deals can you put together and how good are you at writing the contract so that they’re solid and then you’ll find all the money you want. After you split with partners or pay those exorbitant rates, you’ll slowly work your way out of an interest rate. One thing I found interesting in the book, I was writing this chapter, people who are willing to pay high interest rates are probably not real seasoned investors because the more seasoned an investor gets, the less he’s willing to accept 16% or 17% money. He’d say, “I’m solid. I deserve 8% or 10% money. I have a long track record. I’m not the risk that people think.” Do you consider when you loan money that you’re gambling? My wife thought I was gambling a lot of times. I said, “It’s not a gamble.” The stock market is a gamble. Loaning money is a highly calculated decision that either you’re going to get or you’re going to get more if you do it right.

If we’re going to stick with a gambling analogy and if we’re gun to the head and we had to stick to it, I would say, “I’m the house. I’m making the rules. I’m drafting it to where the favor points to me, not you.” In that sense, the casinos never gamble. The people at the table gamble. The casino knows it’s going to get its money. The gamble is made by those that are coming in trying to get rich-quick. When I make a loan, I don’t consider it a gamble. Is there a risk involved? There’s a risk in every investment. I’ve put in all the backstops and all the redundancies to keep my money safe. At the end of the day, even though it’s a future transaction, I don’t feel like it’s gambling at all. I can’t research the deck of cards at the blackjack table. I can research a property and an individual and do my due diligence.

It’s a calculated decision. It’s always a risk. There’s always a chance. If God wants you to lose money on that deal, believe me, you’re going to lose money on it. Who would have thought of COVID? Before COVID, that was never on my radar screen that a pandemic could hit. If you try to hedge yourself against everything that can happen to you then you’re one of those people that would be paralyzed and never do anything because there is no set way that it is a guarantee. Some odds are better than others. You put the analogy of the house. They have the odds in their favor that if these people keep playing at this table, we may lose a bunch of hands but we’re going to win way more than we lose and it’s all going to be okay.

I lost on six deals in my entire career. Luckily, they weren’t all in the same month for over 27 years and I haven’t had it happen in a few years. Their decision is like, “I’m going to make this big number this month but I have this problem. I could get rid of this problem if I lose a little bitty tiny number right now on it. I’ll take this month and lose that little bit since I’m having good on this side. I’ll make a little bit less but it’s still a stellar month in anybody’s book or most people’s book.” On the ones that I’ve lost, none of them crushed me. It was like, “Instead of making $80,000 this month, I’m going to get rid of this problem and I’m only going to make $70,000.” It’s still a good month.

It’s all about safety, security and risk. You can put your money in government T-Bills and make less than 1%. If you go ten years, that’s at 1.5%, 1.6% or whatever. Let’s say in 1999, you’re in Argentina and you put your money in Argentine T-Bills and in 2000, they reset. It’s because America’s the reserve currency of the world nowadays doesn’t mean that we’re going to be that way tomorrow.

More and more are worried about that with every minute that passes. You won’t catch me in the stock market. Learn how to do something on your own. That’s why I love the loan business. If your passion is fancy watches, loan on watches. Take a pawn shop. You can start with smaller amounts of money. Whatever it is you’re loaning on, learn the ins and outs of that game. Don’t be surprised over the next 4, 5, 6, 7 years that it replaces your job if that’s what you want. If you want something to replace your job then start learning how to do that. What keeps offering you could replace your job, even if you don’t have any money to loan. There are ways to get money to loan and you make the spread, you participate or you’re even asking to share.

I’m not going to recommend a student to make a deal if I wouldn’t put money in it myself. I want to teach and coach. That’s the bottom line. I was asked one time if I had all the money in the world, what would I do? I say, “I would teach philosophy at whatever university would have me.” I don’t have a PhD and I’m not going to go get a PhD for that requirement to go teach. What’s the next best thing? I like private lending. It helped me stay in the real estate game. When I was on the rigs, I can’t go meet with property sellers or contractors. I couldn’t flip and couldn’t landlord.

I came out of the field and started the landlord and realized I was horrible. I suck at it. I hired a manager and then found out quickly you have to manage the manager of your rental properties. As an insurance adjuster, I’d have to jump. Anytime something blew up, I was on a plane but on the weekends, I could still go look at a property. I still touch, see, taste, hear and smell everything I can. I want to go to the property that I’m lending on.

That’s why I stick to the Houston area. I don’t have to go outside of the Houston area for that except for Landon. He did make me go to Beaumont and a couple of places on the east side way over there. There are two colors in lending. I always tell people, “I don’t discriminate but my money does. There are only two colors you need to worry about in lending, black and red.” Is the number black? Is it red? That’s all I need to know. It’s binary. Make sure the number is black.

He’s talking about the accounting formulas. You’re either in the black or you’re in the red. Black means you’re making money and if you’re in the red, you’re losing money.

REIS 487 Keith Baker | Private Lending

Private Lending: Private lending is all about availability and speed. It is why people pay the interest rates that a hard money lender or a private lender might charge.


Let’s start with making sure that we’re not in the red and we’re not losing money. You could start doing this if you can find deals, keep those LTVs low and keep the lender feeling safe. You don’t need a license. That is real estate business deals, not owner-occupant stuff.

There are consumer loans and there are commercial loans. A consumer loan is if you’re loaning to someone who lives in the house and it’s their homestead. That’s a whole other different set of rules you can be pursuing for being predatory lending and a whole bunch of things especially the rates that we need to charge as private lenders or hard money lenders. You want to do a commercial loan, which is essentially not commercial property. You’re loaning on something that a person doesn’t live in. This is an investment property other than the house that they live in. Any property. It could be land. It could be anything.

You don’t want to co-mingle funds. When I borrow money from someone to buy a house, I borrow a set of money from one person. I give them a first lien and they’re the only lender on that house. If I don’t pay them, they get the house. I can’t borrow half the house from this guy and half the house from that guy. Who gets the first lien at that point? You can only have one personally. You want to make sure you comply with the SEC and all that stuff. That’s one of the reasons you go talk to someone like Keith. We’d shortcut the whole thing and get on with the good part, which is loaning out money, being in the black and making some money for your effort.

My money, in your model, goes to owner occupants but that’s not my loan.

I owned that house. That’s the difference. I’m loaning on someone’s homestead but I owned the house that I’m taking the money back on. I can’t make a third-party loan. I can’t be the third party between a seller and a buyer. I’m part of the transaction. I’m 1/2 of the equation, not 1/3. I don’t want to get off into the minutiae of this. Tell us about your Private Lender Academy. What’s going on there? You’ve been working on that for a while.

It was launched in July 2021. It’s going to be ugly at first. It’s not going to be pretty but done is better than perfect. I’ve got some beta testers and some students that are going through and helping me get it in a cohesive order to how other people think. It’s soup to nuts. You’re a professional or you either have money or you’ve inherited it or whatever the case may be, you want to get into private lending. This is A to B. What is private lending? How do you protect your money? What to look for? What insurance policies to insist upon? Title, property, island. In the Gulf Coast of Texas, flood insurance from the National Flood Insurance Program is going to be required. It’s $500. If you can’t afford that, you’re not my borrower. End of story. It’s too cheap not to have it. We’ve had enough 100-year storms in the last several years. To necessitate, I’m going to have some flood insurance on the property.

It’s an online course but I also do weekly coaching calls where it’s like, “Bring the deals and let’s talk about it. How do we know if comp is truly a comp? If you’re using an appraisal report, let’s dig into that. Let’s see the location. How close is the subject to the subject property? Does it have tile floors or does it have laminate floors? Is it a true apples-to-apples comparison?” Look at the person. Either you’re going to get paid or you’re not. If you get paid, there’s nothing you can do. If you’re paid as agreed, as a lender, that’s the worst thing that can happen to you because there’s nothing you can do. Your hands are tied.

That’s what you want. The worst thing that can happen to you is that you get paid as agreed. The best thing that can happen to you is if you don’t get paid as agreed.

Now I can go get more money potentially because I’m keeping the LTV right and not buying into the borrower’s hype or the investor’s hype. Standing my ground, if things go wrong, I can make more money than I could if things go right. Human nature comes in. Why don’t we just lend to make sure things go wrong? That is predatory lending. Whether it’s a residential loan or not, it’s a windfall. If things go bad, it can be a windfall and it can help your position.

There are some risks that your money can be held hostage. Let’s say the house gets struck by lightning. You’re probably not going to get your money back in those six months. It may take another 3 or 6 months. The point being, that the insurance policy is going to make the collateral on your loan whole. It’s going to bring that property back. If you had to foreclose and get rid of it, you can. It took you a little longer. I never owned it but my ex-wife owned shares of Enron. She couldn’t put insurance policies on Enron’s stock.

That piece of paper did eventually go down to $0 and wasn’t worth the paper that was written on, the promises. It’s difficult for properties to go down to $0.

The tangible asset. Let’s assume armageddon. Dogs and cats living together and it’s crazy mass hysteria. Our dollar completely crumbles. You still need a place to live and if you’re going to transfer title, you’re still going to need some type of currency.

I like to take my residual leftover money in my bank account and I buy self-storage with it. That’s my forever play. You can have all the loans in the world and money coming in but they’re all going to expire. They’re temporary. Rental property of apartments or something you rent goes on until you decided it ends. I’m doing the storage and my wife said to me one day, “I wonder during bad or hostile times who’s going to want to rent storage.” I said, “At that point, there’ll be living in them. We may not even have money to pay for them but we’ll barter. I’ll have cheese, lettuce, vegetables, cabrito and everything I need but we may not be trading in money at that point. If it gets that bad, there’ll be people that want to sleep in these cubicles so they’re not being rained on.

People need a place. How can you lose? You might have some short-term bumps in the road.

What's a little usury amongst friends? Share on X

That’s one of my problems. I can scare people sometimes by thinking cataclysmic or even talking about it but I like to talk about worst-case scenarios and it’s scary. Sometimes, I lose my people because I say, “If the world goes to hell in a handbasket, this is what happens.

I do private coaching. I do that on a one-on-one interview style basis because I’m not for everybody. I want to make sure that we can jive before we come up.

I do the same thing. If someone wants to hire me for coaching especially the highest levels, I was like, “Let’s see if we’re a fit first because if I can’t help you get your money back on this deal or if I don’t think it’s working, we’ll do something else or I’ll recommend someone to you.” I want to be on a winning team. I don’t want to be on a losing team.

I don’t want to be a cheerleader on a boat that’s going down on the Titanic. Let’s look at it first. There’s an iceberg out there and we might not need to be doing this right now.

I love this business. It’s a great business. Loaning money was probably the second oldest profession in the world.

Why do banks have their names on the largest buildings and sports stadiums in towns? What do banks do? They lend money. That person who becomes a loan officer, they hired him off the street. They’re a teller and they didn’t go to college for finance. They didn’t go to school for construction. None of that. I train these people, “Here are the criteria that we learn by. Either everything falls in the box or it’s outside of the box.” It’s the same thing. There’s no reason why you can’t do this in your retirement account or your cash accounts.

You don’t have to spend $1 billion or spend 4 to 6 years in school to get a Finance degree to be your own bank. Class gets extremely interesting when you’re learning how to protect your own money. It’ll be like no other class you’ve ever taken because you will want to pay attention. You’ll be dialed in like crazy.

Your money changes the game.

I only went to two semesters of college. I was sitting there listening to my Economics teacher who was telling me about how he has to file bankruptcy. I leaned over and says, “This guy’s teaching Economics and he’s filing bankruptcy and I’m paying him?” I said, “How much does this guy make? What does the university pay him?” They said, “He makes $50,000 a year.” I’m like, “This whole thing doesn’t make any sense. I’m out of here.” I did. I picked up my books and I walked right out of the class. I remember waving and I said, “See you later, Economics teacher. Bye.” I’m like, “What am I doing? I’m paying money to listen to this guy.”

You don’t need any of that to be a private lender or a real estate investor. You just need drive, determination and a little bit of money. You need some money to be a lender.

Education is out there. Make no mistake, there is no free education. You either pay The Street or you pay Keith Baker, Mitch Stephen, Ron LeGrand, Lou Brown or somebody. Believe me, you run out of money and you’ll have to quit or you’ll be demoralized. The Street is not a good cheerleader. It’s not going to slap you on the back and say, “Get on up. We can fix this.” The Street will never say that. The Street says, “Try it again, fool. Stop making more of your money.” You got a coach and they’re like, “Don’t turn that corner. I know the people that live down there and you won’t survive it. Go down this corner. Let’s do it this way.”

You’re still going to be spending some money out of your pocket but it’s a lot less stress and you have a better chance of ending up where you’re supposed to go. I graduated from LaCalle U. That’s The Street in Spanish. The Street almost made me quit. It was so hard on me. I would have quit a business because I wasn’t smart enough to hire a coach at the time and they weren’t as prolific as they are now. There wasn’t the internet and all this stuff.

When I look back at that moment, when I took my last $10,000 to get a coach to help me was when I turned the corner and I didn’t quit. I stayed in a profession that little did I know was going to be worth millions upon millions to me over my career. You think of how close I came. Real estate investing just be another business card in a stack of a lot of business cards I have of things that didn’t work out. The new people that are contemplating and looking for something to do and don’t know exactly where they belong in this world but they know they don’t want to have a job for the rest of life, what’s your advice to them before we wrap it up?

This is going to sound completely weird but take everything off the plate and get real calm. Go to the woods, sit with yourself and figure out what it is that you’re good at and the things that you could continue to do. For me, I got to a point where I was in a career where I could put my feet up on my desk and coast. Mitch, it scared the hell out of me. I got quiet and I said, “I’m going to continue my day job doing the insurance adjusting in the oil field because I like it.” I get to go to cool places like the Strait of Magellan in London and Lillehammer, Norway. It’s fun. I keep private lending because that is my passion. That’s the creative outlet with the podcast and the Academy.

REIS 487 Keith Baker | Private Lending

Private Lending: There are only two colors in lending: black and red. Black means you’re making money, red means you’re losing.


I don’t have to be so involved in real estate. I just want to be involved in real estate. I don’t want a real estate job necessarily. For me, it’s defining what I’m comfortable at and what I’m willing to do. After that, if private lending is in your wheelhouse, great. Maybe it’s wholesaling, owner finance or whatever. I would stay away from the MLM, multilevel marketing stuff if possible. Try to get quiet and realize that a lot of the noise in your head, you create yourself.

I would create something that you create that you own. That’s the problem with MLMs, if you ask me. They can fail and they can have a fault and then all that work that you put into them can go down. I would at least like to look in the mirror and go, “If it failed, it’s because it was me, not someone else.” I want to caution people. You don’t have to have a huge multi-million-dollar goal. Maybe the first thing you want to do is figure out how to replace your income. If your income is $3,500 a month, that’s your first goal. All of a sudden, that little goal, which is probably the most important goal of all because once you get to $3,500 a month coming in, you can quit a job that probably requires 2,600 hours a year from you. Now you can take that extra 2,600 hours you’re going to have and figure out how to make that $3,500 into $7,000 and into $10,000.

Keep trying to up your game a little bit and see where it takes you. Some people say, “I want to be making $100,000 a month at the end of fifteen years.” I never looked at anything like that. I always just said, “I want to do better this coming year than I did last year.” It has exceeded my wildest dreams. Don’t think you have to have these huge obstacles. I would like to thank each and every one of you for stopping by to get you some Keith Baker.


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About Keith Baker

REIS 487 Keith Baker | Private LendingI began painting houses in high school with my neighbor Marc and worked construction through college, performing rental make-readies and flips for investors while earning a degree in Philosophy and German. No really, I did, and I actually admit it!

I started my own construction/general contractor company after college because I didn’t want a “real” job” and earned my Ph.D. (Public humiliation Diploma) when I trusted the wrong people and my friends trusted me, erroneously: I didn’t plan, so I planned to fail. Yep, my business and I failed miserably.

I worked as a Construction Manager at McGuyer Home Builders (Pioneer and Plantation Homes). I managed the construction of single-family homes from the $150’s to the $350’s in Richmond, TX area. Once housing starts began to drop I could see the writing on the wall: since I was the last to be hired on, I would be the first to go. So, just as the housing market peaked I jumped headfirst into a field position with an oilfield service provider: Schlumberger (thank you Curtis Rene`!).

I then parlayed my oilfield knowledge into a career as an energy loss adjuster, mainly in the upstream and midstream Oil & Gas sector, handling claims and settlements in excess of $100,000,000. To date, I have overseen the settlement and payment of claims in excess of a billion dollars of Other People’s Money, primarily on behalf of syndicates at Lloyd’s of London.

When I decided to invest in real estate I hadn’t yet developed the confidence to speak to sellers, so I bought my first investment property from my parents, just to get moving. My wife and I then house hacked our way through our starter home, which we slowly flipped for a nice profit. Then I decided it was time to become a landlord, which I again learned about the hard way!

Because I travel so much for my day job, I converted an old 401(k) into a self-directed IRA (SDIRA) and began private lending to local real estate investors to keep me in the real estate investing loop, close to the action, and to expand my network. Through private lending I bought my first rental property from a potential borrower and I met my business partner, Landon. Together Landon and I formed Asset REI, LLC, which focuses on providing owner financing to buyers and properties that are neglected and overlooked by the too big to fail banks: thus we become the bank!

I’ve had the honor to serve on the board of one of the oldest non-profit Real Estate Investing Associations in the United States: The Realty Investment Club of Houston (RICH).

My goal for the Private Lender Podcast is to provide you the knowledge and confidence to step up to the world of alternative investments, take control of your future in terms of your well being and education, not just your finances.

Remember, the greatest real estate investment you can make is in the space between your ears.

I wish you safe, happy and prosperous investing,


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