Why the Best Private Lenders Know Construction Before They Know Finance

On Accredited Investors Only, host Peter Neill sits down with Mike Seidl, a serial entrepreneur turned private money lender, to unpack a part of real estate finance that gets misunderstood all the time: the difference between true private lending and the hard money world built on Wall Street capital.

Mike’s path into lending did not start in finance. It started in business. Over four decades, he built and sold a medical alert systems company, then built and sold a property damage construction company that handled 250 to 300 repairs a year. Today, he deploys millions of dollars of his own capital, alongside capital from friends, family, and a small investor community, into real estate-backed loans.

What makes his approach especially useful to study is that he does not think like a paper pusher. He thinks like an operator. And in private lending, that matters more than most people realize.

Private Money vs. Hard Money: Why the Distinction Matters

One of Mike’s first points is that many lenders market themselves as private money lenders when they are really hard money originators.

In his view, a lot of so-called private lenders are not lending their own money at all. They are originating loans based on criteria set by institutional capital sources. In other words, they are operating inside someone else’s buy box.

That creates a very different borrowing experience.

With hard money, the decision often comes down to whether the deal fits a predefined template. If it does, the loan moves forward. If it does not, the conversation usually ends there.

With true private money, the capital is personal. The decision-makers are the people actually putting the money out. That creates room for judgment, flexibility, and nuance.

For Mike, that means a borrower is talking directly to him or his partner. If the deal is backed by real estate, the numbers work, and the operator is solid, there is room to structure something that makes sense.

The key difference is simple:

Hard money often follows Wall Street rules.
Private money can be tailored by the actual capital provider.

That flexibility has allowed Mike to lend on much more than standard fix-and-flip houses.

How Mike Got Here: Three Businesses, Then a Wall Street Exit

Mike describes this as his third company.

Company #1: Medical Alert Systems

Back in 1987, at age 23, he started a medical alert systems company with a partner who was 20. This was early in the “push a button, get an ambulance” era. They grew the business over ten years and eventually sold it to a public company that was acquiring monitoring accounts.

Part of the business model’s strength was that many of the systems were paid for by state programs. Patients would prove need through a doctor, and the state would cover the service because it was cheaper than long-term nursing home care.

Company #2: A Property Damage Construction Company

His second company focused on repairs after fire, water, and vehicle impact losses. At its scale, the company was doing hundreds of repairs annually. That construction background later became one of his biggest advantages as a lender.

He sold that business in 2017.

The Shift Into Lending

After selling the construction company, he began lending money informally on handshakes to people he knew in the restoration world. One borrower had a clever strategy: when a house had a fire severe enough to require a full gut renovation, they would buy the property directly from the homeowner, then repair and resell it.

That was Mike’s entry point into real estate lending.

Then came a bigger turning point. In 2019, he heard a former Wall Street insider explain how the system worked behind the scenes for retail investors. Mike spent about nine months trying to disprove what he heard. He could not.

So he made a decision. He exited the stock market entirely and sold millions of dollars of stock. Then he went all in on private lending.

That decision shaped the business he runs today.

From Single-Family Loans to Mobile Homes, Multifamily, and Rescue Capital

Mike did not stay in one narrow lane for long.

He started with single-family properties, which is a natural place for many lenders to begin. But over time, as trusted relationships developed, he expanded into other niches.

Mobile Homes in Florida

At first, this category did not make intuitive sense to him. Growing up in Massachusetts, mobile homes were low-value assets. Then he met an operator in Florida who was selling mobile homes for well into the six figures.

Mike’s first reaction was skepticism.

Instead of dismissing it, he did the work. He checked the market, vetted the borrower, ran a background check, and confirmed that the local pricing and strategy were real. Once the numbers and operators checked out, he started lending in that niche.

Small Multifamily Without a Syndication

He also began financing small multifamily operators, especially those buying buildings under roughly 50 units. In some of these deals, the borrowers needed acquisition and repositioning capital, but the deals were too small to justify the time and dilution of raising a syndication.

Private debt solved that problem.

Instead of giving away major equity, the borrowers paid a higher cost of capital but kept ownership of the deal.

Rescue Loans and Business-Purpose Lending

As market conditions tightened in 2024 and uncertainty lingered into 2025, some experienced operators needed bridge or rescue capital to get over a hump. Because Mike already knew these people and trusted them, he could step in where more rigid lenders could not.

He even described a short-term business-purpose loan to a real estate operator who also sold lumber. The borrower was in a year-end cash crunch, needed short-term capital, and Mike made the loan with real estate as cross-collateral.

That kind of structuring is exactly where private money stands apart.

How the Business Grew: First Personal Capital, Then Trusted Investor Capital

Mike started by “practicing” with his own money.

That matters. He wanted to get the systems right before taking outside capital. In 2021, a friend reminded him of a prior conversation and offered to put money out through his lending platform. The amount was not trivial.

It started with $1 million.

The returns were strong enough that the relationship grew from there.

Today, his lending business still remains intentionally tight. He and his partner make the decisions. There is no long committee chain. There is no manager above them. But that does not mean they are loose.

If anything, they are more careful because the money is personal.

Why Construction Experience Is an Underrated Superpower in Private Lending

This is where the conversation gets especially valuable.

Many people think private lending is just about capital, paperwork, and collateral. It is not. The loan may be secured by real estate, but the real question is whether the lender understands the asset well enough to spot problems before they become losses.

Mike can.

Because he built and ran a construction company, he knows how to read a scope of work, evaluate renovation budgets, and look at jobsite photos with a trained eye.

That helps in several ways:

He can tell if a rehab budget is unrealistic.
He can challenge inflated finishes on lower-value houses.
He can spot incomplete work in draw requests.
He can identify hidden issues like mold from photos.
He can make better judgments about contractor behavior and timelines.

He gave one simple example. If someone presents a house with a $200,000 after-repair value and wants to install a $90,000 kitchen, that is an immediate red flag.

That may sound obvious, but many lenders without field experience are relying heavily on spreadsheets and borrower representations. Construction knowledge lets a lender pressure test the real-world side of the deal.

A Real Example: Catching an Incomplete Tile Job

Mike shared a story about a borrower in Michigan who submitted photos for a draw request on a bathroom tile job. Mike looked at the photos and immediately noticed something was wrong.

The tile had no trim.

The borrower tried to explain it away by saying that was just how it was done in that market. Mike did not buy it. He pushed back and was prepared to verify with local suppliers and tile professionals. Soon after, the borrower admitted the work was not actually complete and blamed the confusion on a project manager.

That is not just a funny story. It is a perfect illustration of why experienced lenders avoid losses that inexperienced lenders walk right into.

How Mike Handles Due Diligence on Borrowers and Deals

Due diligence has evolved over time, especially as Mike has expanded his network.

Borrower Reputation Checks

One of his strongest due diligence tools is his network. He attends masterminds, knows operators in different markets, and can usually put out a feeler when a borrower comes in from a specific area.

That informal reputation check matters more than people think.

If trusted local operators say, “Do not lend to this person,” that is useful information. If they say the borrower is solid, that helps too. In a business where someone is always trying to pull off a “gotcha,” local intelligence can save a lot of pain.

Valuation Tools

For valuation, Mike uses a combination of:

PropStream
RealtyValue
Redfin

He did not always use all three. Early on, he relied mostly on Redfin. Over time, his process became more refined, and now he uses multiple sources to verify pricing assumptions and arrive at a number he is comfortable with.

Photo Verification

Borrowers also use an app on their phones that geotracks the photos they submit. That allows Mike and his team to verify that the borrower was actually standing at the property in question.

Then they compare before and after photos side by side to make sure the work shown is consistent with the house being financed.

This is simple, practical, and highly effective.

How the Loans Are Structured

Mike outlined a straightforward lending framework for his single-family loans.

Core Structure

Up to 80% of purchase price
100% of repairs
Maximum 70% loan-to-after-repair value, all-in combined

So if the after-repair value is $200,000, the maximum total loan amount is generally $140,000.

That 30% buffer is there for a reason. It gives room for error, time, market softening, and unexpected issues.

Cross-Collateralization for 100% Financing

For borrowers with other properties that still have equity, Mike can sometimes structure 100% financing on purchase and repairs through cross-collateralization.

Here is the concept:

The borrower wants to avoid bringing 20% cash to the closing table.
They offer another property as additional collateral.
That second property must also stay under the lender’s leverage threshold.

For example, if a borrower owns a property worth $100,000 and already has $50,000 in leverage on it, Mike may be willing to use another $20,000 of available equity as the borrower’s effective down payment on a new deal.

Some repeat borrowers even maintain mortgages on a few properties specifically so that this capital is ready to be deployed into future projects.

How Draws Work and Why Speed Matters

Mike releases repair funds only after work has been completed.

That means borrowers submit detailed photos, and only then are draws approved and wired. The requested documentation includes complete views of walls, floors, ceilings, and any area relevant to the scope of work.

His team guarantees fund release within 48 business hours, but often sends the money much faster.

There is a philosophy behind that speed.

Mike understands cash flow because he has run operating businesses. Contractors and borrowers need liquidity. Payroll comes due. Subs need to get paid. Delaying draws for no reason creates stress and slows projects down.

At the same time, the process still protects the lender because funds are not released based on promises. They are released based on verified progress.

Terms, Rates, and Why Expensive Debt Can Still Make Sense

For single-family projects, the standard structure Mike described is generally:

Interest-only payments
Typically a 9-month term
Often 12% interest and 3 points

Payments are typically collected through ACH on the first of the month. That keeps things clean and quickly reveals whether a borrower is staying current.

The 9-month term is a baseline, not a rigid wall. If a borrower communicates well, stays current, and shows progress, Mike may be flexible on extensions. If they disappear, stop paying, and only surface after the fact, asking for more time, the tone changes fast.

In multifamily and more complex situations, terms are handled on a case-by-case basis. Some loans have gone as long as 24 months, especially where stabilization is part of the strategy, and extra collateral supports the loan.

Rates can vary significantly. Mike mentioned charging anywhere from 1% per month to 2% per month, depending on the deal.

At first glance, 24% annualized sounds expensive. Mike does not pretend otherwise. But his point is that many borrowers are comparing that cost to giving up 70% or 80% of the upside in an equity raise or syndication. If the private loan allows them to keep 100% of the property, the math can still work in their favor.

Good operators understand this.

The Paperwork and Protections Behind Each Loan

Mike is emphatic about documentation.

Because he is putting his own capital into these deals, often alongside investor capital, he takes the legal and collateral side seriously.

Typical protections include:

Promissory note
Mortgage or deed of trust
Additional mortgage on cross-collateralized property when applicable
Personal guarantee
Business-purpose affidavit
Title insurance
Attorney-prepared loan documents on every loan
Proof of property insurance
General liability coverage, often at $1 million/$2 million levels
Lender named as the mortgagee on the insurance

The business-purpose affidavit is particularly important. On occasion, borrowers have moved into a single-family property and later tried to characterize the loan differently. Mike wants the file to be crystal clear from the start.

His attitude is simple: when people trust him with their hard-earned money, and especially when that capital sits alongside his own, he owes them every layer of diligence he can provide.

“I am definitely going to cross every T and dot every I.”

What Happens When a Loan Gets Sticky

Mike has not foreclosed on a property in seven years, but that does not mean every loan is perfectly smooth. He mentioned one loan in Florida that has become more difficult because the borrower has not been as forthcoming as needed.

When that happens, he does not go from zero to full force immediately. He gets progressively more assertive.

That matters. You do not want to pull every lever at once and leave yourself no options. But you also cannot let poor communication go unchecked.

If a loan truly went sideways, Mike has two main paths:

Finish and manage the project if the economics justify it
Move the asset to a qualified local buyer or operator

Because of his construction background, he is comfortable stepping into a job if needed. On a single-family house, he would contact the local building department, identify the officials involved with permit approvals, and ask who the good contractors are. He would also talk to local supply houses or Home Depot pro desks to find the crews who actually show up and perform.

On multifamily, he would likely either bring in an experienced operator from his network or, if the deal were compelling enough, manage it by breaking the work down into manageable parts.

His view is refreshingly practical: a 30-unit renovation is not mystical. It is just many repeated components organized correctly.

Construction Advice Most Lenders Never Learn

Mike dropped several construction nuggets that are useful well beyond lending.

1. Ask the Person Who Follows the Trade

If you want to know who the best framer is, ask a drywaller. If you want to know who the best drywaller is, ask a painter.

Why? Because the next trade has to deal with the mistakes of the one before them.

That is one of those pieces of advice that sounds obvious once you hear it, but most people never think to do it.

2. Good Contractors Usually Have Credit

Mike strongly challenged the common borrower claim that a contractor needs 25% down just to begin work.

In his experience, legitimate contractors typically have supplier relationships and lines of credit. They can get materials on terms. Labor payroll is also not usually paid on the exact day work is performed.

So if a contractor claims they cannot start a single-family rehab without a large upfront deposit, Mike sees that as a warning sign.

Permits may need to be paid for up front. That is normal. But if a contractor cannot front a few hundred or a few thousand dollars for permits, he believes the borrower may have the wrong contractor.

He has raised this point with borrowers repeatedly, and each time the demand for large upfront repair draws has backed off.

Why Mike Believes He Was Always Meant to Be an Entrepreneur

Peter also pulled the conversation in a more personal direction, and Mike’s answer was memorable.

He said he always knew he would own businesses because he came from a family with business owners, but also because he has what he jokingly calls a “character flaw” where his brain and mouth do not always work together in a way that suits W-2 employment.

Before entrepreneurship fully took over, he worked in several human services roles, including:

A residential treatment facility for sexually and physically abused children
A psychiatric hospital
A group home for developmentally disabled adults

Those experiences gave him a close look at underfunded systems and emotionally demanding work, but they also reinforced that he wanted to build something of his own.

That eventually led to his first business, and from there, one company after another.

What Might Be Next: Flex Space, Not Tenants and Toilets

Mike is not slowing down, and he has no interest in “retirement” in the conventional sense.

One possible future project he mentioned is flex industrial space. The idea is to buy something like a 15,000-square-foot building, split it into smaller units, and lease them out on triple-net terms.

Why that over residential rentals?

Because he wants nothing to do with the consumer-facing headaches of tenants, toilets, and termites. After years in service businesses and construction, he is very clear that he does not want another front-facing consumer business.

He also mentioned using multifamily investments for depreciation, essentially “buying depreciation” to reduce tax burden where it makes sense.

Why He Will Never Stop Working

This was one of the most compelling parts of the conversation.

Mike sold his first business at 33 and took five years off. Rather than feeling fulfilled, he learned something many driven people eventually discover: doing nothing gets old fast.

His question is blunt and fair:

How much Netflix can a person actually watch? How much golf can they play?

For him, work is not just about income. It is about mental engagement, challenge, and purpose.

He tied that view to two ideas:

1. Blue Zones and Longevity

He pointed to blue zones, the places in the world where people tend to live longer and healthier lives. One lesson he draws from them is the value of a Mediterranean-style diet centered on fish, vegetables, fruits, grains, nuts, and legumes.

2. Mental Stimulation Matters

He also believes that staying mentally active is critical for health and longevity. After stepping away from business for a period, he felt his mind slow down. Starting the next company helped bring that mental sharpness back.

For Mike, continuing to build, think, solve, and engage is part of staying alive in the fullest sense.

Building a Business Around Life, Not the Other Way Around

Even though Mike has no desire to stop working, that does not mean he lives to grind nonstop.

He has built his life around freedom and experiences.

He lives in the Rockies. He is an avid whitewater kayaker and has been paddling since 1996. He described himself, humorously, as “good enough not to die” on class four water. He wants to get on the river at least 50 times this year.

He also loves traveling. He has been to all 50 states, 40 countries, and four continents, with a goal of eventually reaching 100 countries and all seven continents. Last year he visited eight countries. This year he plans to visit ten.

Among the upcoming adventures he mentioned:

Diving the Silfra fissure in Iceland, one of the few places where you can dive between two tectonic plates
Whale shark diving in Roatán

That is not a side note. It is central to how he thinks about money.

The purpose of building income streams and businesses is to create a life worth living. The memories matter. The experiences matter. The challenge matters.

“When I’m on my deathbed, I’m not going to care what I have. I want the deathbed memories.”

The Real Lesson for Private Lenders and Investors

Mike’s story offers more than a playbook for structuring real estate loans. It highlights a broader truth about investing and business.

The best private lenders do not just understand capital. They understand operators, collateral, construction, incentives, and risk in the real world.

That combination is what allows them to be flexible without being careless.

It is also what allows them to build something durable: a business that can support both financial returns and a meaningful life.

For anyone serious about private money lending, fix-and-flip lending, multifamily bridge loans, or building passive income outside the stock market, Mike’s framework is worth studying closely:

Use real due diligence, not just forms.
Know the asset class beyond the spreadsheet.
Protect draws with verification.
Document everything.
Stay flexible, but only with people and deals that earn it.
Build around purpose, not just yield.

That is a much stronger foundation than capital alone.

Connect With Mike Seidl

To learn more about Mike and his lending business: