Four Ways to Invest in Private Real Estate Lending: What They Are and How They Actually Work

Estimated reading time: 8 minutes

When we were designing Mayacamas, we thought seriously about launching a fund. It is how many private lenders scale, and the model works well in the right hands. We decided against it.

Before we explain why, it helps to understand what the options actually are. The business purpose lending space, short-term loans made to real estate investors secured by investment property, is served by four distinct structures. Each one differs in what you own, who controls the decisions, and what your rights are. In California, the license a lender holds determines which structures they are authorized to operate. Every state has its own rules, so what applies here does not automatically apply elsewhere.

Here are the four structures. We will come back to our decision at the end.

Structure One: The Pooled Mortgage Fund

The simple version: You hand money to a manager. They combine it with everyone else’s capital, make loans, collect interest, and send you your share. You never choose a specific loan. You are trusting the manager to do it well.

The analogy: Think of owning shares in a company versus owning the business itself. As a shareholder you get dividends, you trust management to make good decisions, and selling your stake is not always on your timeline. You are not in the room when decisions get made. In a pooled mortgage fund, you are the shareholder. The manager is running the business.

In a pooled mortgage fund, the structure is similar. The manager, licensed under DRE or CFL, raises capital from accredited investors. Each investor receives membership units in the fund, not ownership of any specific loan. Fees come off the top: origination, management, servicing, and sometimes a profit share above a preferred return. The PPM sets the lock-up period, typically twelve months minimum, the redemption process, and the conditions under which the manager can delay or deny a request. Those terms are legally disclosed, written in dense language, and can feel very different in practice from how they read on paper.

California fund operators in this space include TaliMar Financial, which focuses on California residential and multifamily bridge loans, and Sterling Pacific Financial, which runs two investor pools on California investment properties. Pacific Private Money was a well-known Northern California example before ceasing operations in early 2026. The core risk in any of these structures is the same: you are investing in the manager as much as the real estate.

Structure Two: On-Title Investing Through a DRE Broker

The simple version: You review a specific loan on a specific property. You decide whether to lend. Your name goes on the deed. Interest comes to you monthly. When the loan pays off, your principal comes back directly.

The analogy: You are the bank. When someone buys a house with a mortgage, the lender holds the deed of trust recorded at the county. That lender has the note, the lien, and the legal standing to act if the borrower stops paying. In on-title investing, that lender is you. Your name is on the recorded document. The property is your collateral. Not a fund’s collateral, not a manager’s collateral. Yours.

A California DRE-licensed broker sources the loan and presents it to investors before closing. Each investor reviews the package: property, borrower background, appraisal, title report, LTV, exit strategy. If they invest, funds go directly into escrow. The promissory note and deed of trust are recorded with each investor’s name as beneficiary, proportional to their contribution. California law allows up to ten investors per loan under the multi-lender statute, or up to 35 under a separate securities exemption with additional disclosure requirements.

Interest is paid directly to each investor monthly from a regulated trust account. Principal returns when the borrower pays off. If the borrower defaults, investors holding a majority of the beneficial interest direct the response, including foreclosure. Their rights come from the recorded document, not from a manager’s cooperation. The tradeoff is real: each investor reviews and approves every loan individually, capital is committed for the loan term, and problems affect them directly. What they gain is visibility, legal standing, and control that no pooled structure can replicate.

California trust deed brokers operating in this space include Bridge Loan Financial, North Coast Financial, and CrowdTrustDeed. Mayacamas Lending also operates under this model exclusively, which is described in the final section.

Structure Three: The Securitization-Based Lender

The simple version: The largest national lenders originate loans, bundle them into pools, and sell those pools to institutional buyers. As an individual investor, you are generally not in the picture.

The analogy: Think of how products end up on a grocery store shelf. The manufacturer sells to a distributor who sells to the store. As a shopper, you are not part of that supply chain. Securitization platforms work the same way. The loans flow from originator to institutional buyer through several layers of infrastructure. Individual investors are not in that chain.

A securitization-based lender originates loans using a warehouse line from a bank, bundles them into a vehicle that issues rated notes, and sells those notes to pension funds, insurance companies, and large asset managers. The lender gets its capital back and originates more loans. Kiavi originated $7.8 billion in loans in 2025 and has closed more than 20 rated securitizations. Easy Street Capital closed its first $175 million securitization in 2025. RCN Capital and Temple View Capital operate at similar institutional scale. Individual accredited investors are not the buyers. When someone names these platforms as a reference point for the private lending market, they are describing a capital model that has nothing to do with a California mortgage fund raising money from individuals through a PPM.

Structure Four: The Balance Sheet Lender

The simple version: The lender uses its own capital or a bank credit line to fund loans, holds them on its own books, and services them directly.

The analogy: The lender bets their own money on every loan they make. No pooled investors behind them, no fund structure. Their capital, their risk, their call. When it is your own money on the line, you underwrite differently.

Anchor Loans is a California example operating at scale on institutional capital. Smaller regional hard money lenders operate the same way from their own resources. As an individual investor, you generally cannot access the specific loans on a balance sheet lender’s books unless that lender also holds a DRE license enabling them to broker individual deals to outside investors. Some firms hold both licenses for exactly that reason.

Why We Decided Against the Fund

So why did we decide against the fund model?

The reason was straightforward. We wanted our investors to understand every deal they were part of, evaluate the collateral themselves, and hold a direct lien on a specific property. We are a Sonoma County company. Our investors are local. The properties are local. There is something meaningful about lending on a piece of real estate you can drive past, knowing your name is recorded against it at the county. That proximity changes the relationship between capital and collateral in a way that a pooled fund cannot replicate.

We also made the decision to service every loan ourselves on behalf of our lenders. This was not a minor operational choice. Our founder’s background is in collections, and that experience shaped how we think about loan performance. The central lesson of collections work is that time is the enemy. Every day that passes after a borrower falls behind decreases the probability of full recovery. Working collaboratively and quickly with borrowers at the first sign of trouble produces better outcomes than waiting for a problem to surface in a report. When you outsource servicing to a third party, you lose that window. Problems arrive late, already hardened. By the time the servicer flags an issue and routes it back to you, the options that were available on day three are gone by day thirty. We service in-house so we are never in that position. When a payment is late, we know it that day. We are already in contact with the borrower. Our investors hear from us before the situation has a name, not after it has become a default.

We hold a California DRE license only. That means we are authorized to broker loans to individual investors who go on title. We cannot run a pooled fund and have no interest in doing so. Every investor we work with knows the address of the property their capital is on. They can drive by it. They can look it up at the county recorder. That is not a feature of what we do. It is the foundation of how we do it.

If you are an accredited investor who has been in a fund and is thinking about what it would mean to be on title instead, we would welcome that conversation.

Mayacamas Lending Inc. is a California-licensed private bridge lender and loan broker headquartered in Santa Rosa, Sonoma County. DRE License #02306252. This article is for informational purposes only and does not constitute investment, legal, or securities advice. All investments carry risk, including the potential loss of principal. Consult qualified legal, tax, and financial advisors before making investment decisions.