Becoming the Bank: The Simple Lending Process that Creates Passive Income for Everyday People
Reviewed by Jill Rey for Reader Views (08/2022)
In “Becoming the Bank,” author Chad Robinson seeks educate and offer solutions to investors beyond the traditional sense. Creating a guide to operating in the private lending space, Robinson provides definitions, insights, and expert knowledge for others to gain comfort in diving into this investment opportunity, well beyond that of the stock market and other passive investment vehicles.
As an underwriter at a big bank myself, I was immediately fascinated by Robinson’s concept. Admittedly, I am an extremely risk adverse person. Whether this is due to the nature of my career or my upbringing, I typically stray far away from non-traditional investment vehicles, so I went into this read eyes wide open. However, I was curious how Robinson intended to educate readers on finding passive ways to use their extra money in the private lending space, something I was not well versed in prior to beginning this read.
Robinson’s passion is on full display in “Becoming the Bank” as he’s dedicated his entire life to real estate. As he mentions, it is in his blood, and he’s been around it since birth. His career in real estate lends well to his ventures in private lending spaces, as the knowledge and foundation in real estate is already there. That said, after reading this, I am not convinced this is a strategy for everyone.
Unlike stocks and traditional investing, private lending, as Robinson has defined it here, would appear to be more of a full-time job as it requires learning, researching, and networking before even making an investment in helping individuals or groups purchase real estate outside of the traditional bank’s lending avenues. People looking to invest in the private lending space need to have excess cash and or liquid assets lying around and they need to feel comfortable playing the role of bank when banks don’t take on these customers for various reasons, whether it be credit scores, reliability of income, etc. Essentially, the idea is to be a sort of Robinhood to people falling outside of a traditional bank’s scope, a noble feat but certainly not for the faint of heart.
The passive investing present in “Becoming the Bank” seems to be more heavily geared toward those in real estate already, with knowledge of the market, or individuals in the finance, legal or accountancy professions with excess money to inject. The author mentions several times his business and administrators surrounding his private lending practice, further showing this may be outside the scope of the average investor. As a lender myself, at a large bank for more than a decade, some of the concepts and lending scenarios can get complex. While private lenders can certainly offer high interest rates and garner a lucrative investment, with the investment being secured by real estate no less, there remain certain obvious risks as these types of lending transactions are available to private lenders because big banks have already turned down the opportunities.
Thus, while I remain skeptical myself, I am fascinated by the business and the wealth this author has made for himself. Robinson is clearly knowledgeable, passionate, and well educated on the process, as he puts together an inclusive training guide and educational introduction. “Becoming the Bank” covers everything from what private lending is, to how to find customers, and the different types of lending. It offers an alternative investment strategy, using the security of real estate to lower the overall risk investors are taking on, and offering a clearly profitable endeavor, but it all requires some serious business acumen and takes on a more active investment role than the traditional passive investing options used today via the stock markets.