A Reliable Path for Earning Income Like the Banks Do
Private lending is an increasingly popular way to earn income from real estate without buying property or becoming a landlord. As a private lender, you provide funds to a borrower and receive steady interest payments in return. But unlike traditional loans, these agreements are often shorter in duration, smaller in size, and more accessible to individual investors.
At the Passive Income Network, we work with private lenders who want to earn consistent income through loans backed by affordable owner-occupied homes. We handle the paperwork, service the notes, and provide you with curated opportunities designed for long-term success.
If you’re exploring this opportunity for the first time, this guide will walk you through the basics: what private lending is, why affordable owner-occupied homes are an ideal niche, and how you can start building income streams that feel truly passive.
How Private Lending Works
The core idea of private lending is simple. You loan money to a borrower, and in return, you receive monthly payments that include both interest and principal. These loans are typically secured by real estate, which means you hold a promissory note and, in many cases, a deed of trust.
Making the connection between lender and borrower can be a challenge. Banks go through a vetting process to minimize the risk of default, a task that can be difficult for individual lenders. In the case of the Passive Income Network, the notes we offer have already been originated by our parent company, Affordable Housing Loans. Once the note is created, it becomes available to private lenders in our network. You don’t have to find borrowers, vet their credit, or evaluate the deal. We do that for you.
Instead, your role is to review opportunities that meet your financial goals and other criteria and decide whether to invest. Once you purchase a note, we manage the rest: collecting payments, sending you monthly distributions, and keeping records for tax season.
Each note is structured with conservative loan-to-value ratios and repayment terms that are easy to follow. Most of our loans are amortized over 10 to 18 years, providing steady monthly income and a defined exit timeline.
Why Affordable Homes? The Opportunity Behind the Niche
Affordable owner-occupied homes are one of the most overlooked asset classes in the real estate world. However, for private lenders, that’s often where the opportunity lies.
First, these homes serve a high-demand segment of the population: people looking for affordable housing. In many regions, these homes offer one of the only paths to homeownership. For investors, that means consistent demand, steady occupancy, and a strong incentive for reliability from borrowers.
Second, the loan sizes for smaller homes are more manageable. Our notes are often large enough to generate meaningful income but small enough to avoid putting all your eggs in one basket, allowing for diversification, especially for investors who want to spread their funds across multiple notes.
Finally, this market is historically underserved by banks and large lenders. That oversight creates a space where private lenders can step in and earn attractive, risk-adjusted returns without competing with institutional capital.
This type of investment might not be flashy, but they are practical and necessary as people enter the housing market. At the Passive Income Network, we have found that they represent a stable cash flow opportunity for our lenders.
Understanding the Private Lending Paperwork
One of the biggest barriers to entry for new private lenders is the amount of paperwork involved to make a loan and protect your investment. Thankfully, you’re not expected to become a legal expert. Here’s what you should know as you get started..
Every private loan is documented with a promissory note, which outlines the terms of repayment and the amount owed. Many loans also include a deed of trust, which secures the loan with the physical home itself. These documents protect your interests as a lender.
In addition, a servicing agreement outlines how the Passive Income Network will manage the day-to-day operations on your behalf. That includes collecting payments, sending reports, and handling communications with the borrower.
What makes this process simple for you is that the Passive Income Network handles all of the document preparation. Our team ensures the paperwork is complete, compliant, and ready to sign, avoiding legal headaches and confusion..
It’s important to understand what you’re signing, but it’s just as important to have a team that makes the paperwork process seamless. Our team is here to obtain signatures and process information so you don’t have to.
Private Lending Risks and How They’re Mitigated
Every investment comes with some level of risk, and private lending is no exception. The most common concerns involve the possibility of borrower default, unexpected early payoff, or changes in the housing market.
Default risk is what most people think about first. What happens if the borrower stops paying? Fortunately, this risk is significantly reduced when loans are properly underwritten and professionally serviced. At the Passive Income Network, each loan is evaluated for creditworthiness, repayment ability, and property value before it ever reaches you. If a borrower does default, our servicing team handles the collection process and, if necessary, pursues legal remedies. You’re not left to manage it alone.
Early payoff risk is the opposite problem. A borrower may refinance or pay off the loan early, which means your investment ends sooner than expected. While this can be disappointing for those seeking steady income, you still receive the remaining principal and any interest accrued. You won’t have lost assets, but it will affect your projected income stream. However, once you receive your funds, you can reinvest them into another available note and continue the process.
Collateral valuation risk occurs when a property is not accurately assessed at the time of underwriting. If the collateral is overvalued, the loan-to-value (LTV) ratio may be too high, leaving little equity buffer in case of default. To protect against this, our team conducts a thorough valuation of each manufactured home using market data, condition reports, and regional comparables. Conservative LTV thresholds are maintained to ensure the note remains well-collateralized.
Insurance risk can also impact loan security. If the collateral is not properly insured, a loss event, such as a fire or storm, could result in damage to the property and potential loss of value. That’s why the Passive Income Network requires valid, active insurance policies on every home tied to a note. We track coverage continuously and follow up if there are any lapses, ensuring the asset backing your investment is protected at all times.
Market risk is a broader concern. If property values decline or regulations shift, it could affect the long-term security of the investment. However, one of the advantages of working with affordable owner-occupied homes is that these loans are typically low balance and amortized over relatively short periods, so your exposure is limited compared to traditional mortgages.
Risk is part of the equation, but it doesn’t have to be unmanaged. The Passive Income Network works to reduce your exposure while giving you consistent, predictable income.
Is Private Lending Really Passive Income?
Many investors love the idea of private lending but worry about the practical logistics. Who collects the payments? Who handles paperwork and communication? What happens at tax time? If the lender is responsible for these details, it’s difficult to consider the proceeds to be passive income. That’s where working with a servicing team makes the difference.
For example, at the Passive Income Network, we take care of the hard parts so you don’t have to. We:
- Collect monthly payments from borrowers
- Distribute your income directly to your bank account
- Provide regular reports and year-end tax documents
- Track insurance and compliance for each note
- Handle delinquencies or default recovery when needed
You receive clear documentation and real-time access to your portfolio, but you’re not burdened with phone calls, billing cycles, or bookkeeping. We’re here to protect your time, your capital, and your peace of mind, so you can focus on enjoying the returns. We believe passive income should be truly passive.
What Are Typical Private Lending Returns?
Private lending is about generating consistent, bank-style income from real assets. It is not a short-term, get-rich-quick strategy. Most notes offered through the Passive Income Network fall within an interest range of 7 to 10 percent, depending on the term, borrower profile, and collateral. Payments are made monthly, offering cash flow that feels much like rental income, without tenant concerns, repairs, or unprofitable vacancies.
For investors looking to preserve capital while generating real income, this is a refreshing alternative to volatile markets or underperforming savings vehicles. As always, returns are never guaranteed. But with the right structure and servicing in place, they can be steady and predictable.
How to Start Your Private Lending Journey
If private lending sounds like a good fit for your financial goals, getting started with the Passive Income Network is simple. The first step is to contact us for a consultation to see if we are a good fit for one another. From there, we’ll walk you through the onboarding process and make sure you understand our process. We regularly share new investment opportunities with our member lenders. You can review these opportunities and express interest when you’re ready to invest.
Our goal is to make private lending accessible, reliable, and most of all passive, because passive income should live up to its name.
