Turning Investment Capital Into Passive Income: Rich Lennon’s Private Money Playbook

When it comes to building wealth, most people think about grinding away at their day jobs, stashing cash in retirement accounts, and hoping the stock market smiles kindly on their investments. But what if there was a smarter, more strategic way to make your money work for you, so effortlessly, it feels almost unfair? 

On a recent episode of Raising Private Money with Jay Conner, private money expert Rich Lennon shared his journey and the powerful lessons he’s learned about growing wealth as both a real estate investor and private money lender. If you’re looking to make your money work smarter, not harder, here are the key takeaways from Rich’s fascinating approach.

The Shift from Busy Investor to Effortless Lender

Rich’s story is one that many investors dream about. After spending years as a full-time real estate investor—flipping four to five homes a month—he decided to pivot in early 2020, right as the pandemic hit. He’d reached his financial "magic number,” felt burned out by the daily grind, and recognized that lending money to other investors was not only less stressful but also more profitable and less time-consuming.

Today, Rich manages over $8 million in private loans and works less than five hours a week. The secret? He stopped being the one swinging hammers and started being the one providing the capital—the backbone of every successful real estate deal.

Why Private Lending Makes Sense

Private lending is all about putting your money to work for you. Instead of seeking out, purchasing, renovating, and selling properties yourself, you provide the funding for other experienced investors to do the heavy lifting. Rich’s lending model allows him to earn double-digit returns while enjoying a much lighter workload. Just three hours of due diligence per deal—mostly underwriting the property and paperwork—yields returns that rival or exceed what he made flipping properties himself.

How Rich Minimizes Risk

A key pillar of Rich’s strategy is underwriting based on the asset, not the borrower. He relies on rigorous, asset-based criteria, typically lending no more than 70% of a property’s After Repair Value (ARV) minus repairs. This conservative approach protects him if a borrower defaults, since the underlying real estate is usually worth more than the amount loaned.

Rich has also embraced technology by leveraging Artificial Intelligence (including ChatGPT) to analyze comps and value properties. According to him, AI is now just as accurate as human analysis for determining ARVs, which speeds up his process and further reduces his risk of error.

Unlocking Massive Returns with Private Money

One of the most remarkable aspects of Rich’s model is how he combines his capital with what he calls “lazy money”—funds from passive investors looking for solid, predictable returns. Here’s how it works: if a borrower needs $200,000, Rich might put up $100,000 while another investor provides the other $100,000. He then lends out the total at 20% interest to a flipper. He pays his partner a flat 10% return, keeping the remainder for himself. The result? His money often earns a 30% annual return, while his partners enjoy passive income with little involvement or worry.

The Power (and Simplicity) of Self-Directed IRAs

Rich also teaches investors how to supercharge their retirement savings using self-directed IRAs. By flipping or funding real estate deals within a tax-advantaged account, investors can grow their portfolios exponentially faster than traditional stock market investments allow. While there are rules to follow, the key advantage is that all profits compound tax-free, allowing even small accounts to snowball rapidly over time.

Final Thoughts: Action Drives Wealth

The ultimate message from Rich Lennon is simple but powerful: take massive action and let your money move. Whether you’re tired of riding th