I Cracked the Code for More Cash Flow & Less Risk (Rentals + Private Lending)

Summary of I Cracked the Code for More Cash Flow & Less Risk (Rentals + Private Lending)

by BiggerPockets

40m•November 17, 2025
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Overview of I Cracked the Code for More Cash Flow & Less Risk (Rentals + Private Lending)

This Real Estate Rookie episode features Shalom (Envy Investment GRP), a college grad who jumped from studying institutional real estate finance into active investing — starting with private money lending, then flips, and now rentals. He explains how he sourced his first private loan, structured deals and rehabs, weathered a loan default that led to converting two loans into rentals, and recently built a small lending fund. The conversation is full of practical rookie-to-intermediate lessons on underwriting, loan docs, deal structure, lender protections, and building a low-risk, cash-flow-focused portfolio.

Guest background

  • Education: Real Estate Finance major (Baruch College) — trained in institutional underwriting, cap rates, Fannie/Freddie, and large-scale finance.
  • Early experience: Interned in private equity, REITs, underwriting and asset management.
  • Investing profile: Started as a private money lender, moved into flips and then small multifamily rentals. Currently owns 9 doors (3 in NJ, 6 in Milwaukee) and runs a private lending fund for friends & family.

Key stories & deal examples

  • First private lending deal (with BiggerPockets author Grace Guttenkopf):
    • Purpose: Bridge financing for a flip in Tucson.
    • Terms: 11% annualized interest, 6-month term, monthly interest-only payments, option to prepay without penalty.
    • Structure: First-lien note; borrower put some equity and covered part of construction; Shalom and his parents funded the loan (he contributed ~$50k, parents ~$250k).
    • Monitoring: Monthly/biweekly updates and staged draws on construction.
  • Defaulted loans that became rentals:
    • Lender withheld full funds (used draw releases), borrower stopped paying, communications stalled.
    • Instead of costly foreclosure, Shalom took the properties back, completed rehabs, and converted them into rentals that cash flow ($200–$300/unit).
    • Lesson: partial funding via draws preserved lender equity and alternative exit (keep as rental) was viable for nearby assets.

How Shalom underwrites & structures loans

  • Typical borrower screening:
    • Experience, credit, and how well they communicate / organize documents (communication is a strong qualitative signal).
  • Financial terms he uses:
    • Interest rates negotiable (example: 11% on first deal).
    • Monthly interest-only payments + balloon payoff at refinance.
    • Draw-based rehab disbursements tied to invoices, photos, and inspections/permits.
    • Extension fees or default interest included in docs (e.g., 0.5–1% extension).
  • Legal protections:
    • Use an attorney to draft promissory notes and security instruments (recommendation: spend ~$1–2k).
    • Consider remedies beyond foreclosure (e.g., rights to borrower's LLC in some jurisdictions) — state law matters.

Rental strategy & market choice (Milwaukee)

  • Buy box: 1–4 unit small multifamily (duplexes), occasional small commercial consideration but financing is harder.
  • Market selection process:
    • Traveled to Midwest (one-day market trip), walked neighborhoods, met agents and property managers, reviewed MLS/wholesale deals.
    • Chose areas with minimal yards (less maintenance/fines), street parking, stable tenants, and neighborhoods with upside but still affordable basis.
  • Financing examples:
    • Used DSCR loan with 20% down for one duplex.
  • Current portfolio goal: maintain ~60% overall loan-to-value across portfolio (some properties will vary).

Fund structure & scaling the private-lending business

  • Shalom formed a private lending fund for friends & family.
  • Typical economics:
    • Preferred return to investors (LPs).
    • Remaining interest/profits split between General Partner (GP) and LPs; origination fees and sale profits split per fund terms.
  • Primary investor base: friends, family, and immigrants who have paid-off homes and want passive returns.
  • Use-case: The fund provides passive returns to investors and a scalable pool of capital to fund more loans — can also fund the founder’s own deals if needed.

Biggest lessons & notable insights

  • Low leverage is powerful: avoid 85–100% financing on rentals — aim for 20–30% down per deal and ~60% portfolio LTV.
  • Vet the borrower and the deal: make sure you’d be comfortable owning the asset if the loan goes bad.
  • Staged draws save you: funding rehab in phases protects equity and reduces downside.
  • Legal docs matter: hire a real estate lawyer and bake in default, extension, and remedy provisions that work in your state.
  • Organization & communication from borrowers is a strong, often underrated underwriting metric.

Notable quote:

  • “If you had to own this property, are you comfortable with it?” — Shalom’s quick rule for vetting loans and worst-case outcomes.

Practical, actionable checklist for rookie private lenders

  1. Vet the borrower:
    • Check experience, credit, and ask for documented track record.
    • Assess communication and organization (Google Drive, consolidated docs).
  2. Underwrite the deal:
    • Confirm ARV, construction budget, exit strategy (refinance, sell, rent).
    • Target conservative LTV/LTC (aim ≤65% LTC; ~60% portfolio LTV).
  3. Structure money flows:
    • Interest-only monthly payments + balloon payoff.
    • Use draw-based rehab disbursements tied to invoices/inspections.
  4. Legal & contracts:
    • Hire a real estate attorney for promissory note, mortgage/assignment, default interest clauses, extension fees and remedies.
    • Include clear default remedies and consider LLC assignment options, depending on state law.
  5. Contingency planning:
    • Plan for worst-case: foreclosure, non-performing loan sale, or converting to rental.
    • Know local eviction/foreclosure timelines and costs.
  6. Start small & diversify:
    • Consider partnering with family/friends or joining a small fund if you lack capital.
    • Keep loan sizes manageable and spread risk across deals.

Rapid-fire takeaways (from the interview)

  • Biggest rookie lesson: Low leverage is essential.
  • One-piece advice for new private lenders: Do deep research on borrower + deal; be comfortable owning the asset if needed.
  • Most important qualitative metric: Borrower’s organization and communication.

Contact & resources

  • Shalom / Envy Investment GRP:
    • Instagram: @EnvyInvestmentGRP
    • Website: EnvyInvestmentGRP.com
    • Phone (as shared on the episode): 973-737-9905

This episode is especially useful if you’re considering starting as a private lender, building a small lending fund, or expanding from lending into rentals. Key themes: conservative leverage, staged funding, lawyered loan docs, and always underwrite the worst-case exit.