Private Credit Fund: My Advice

The riches are made in the niches, and if you can find a specific niche that derives alpha, I believe you can do very, very well. For example, my fund, we were doing short-term loans. They had clients coming through this business that needed financing. We would only work with the clients that were maxed out on their credit cards. We'd come in, we'd give them a debt consolidation loan. We consolidate on their credit card debt. So they had $10,000 of credit card debt. We consolidate it down into one loan from us. We'd pay off their credit cards. It would make their credit look really good. They could then go out and get business credit for $50,000, $60,000, $70,000, $100,000. Once they got the $70,000 of business credit, they would come back to us, pay us back our loan plus interest rate. We did extremely well over the years. We did over 300+ loans. We had a 64% net rate of return to investors year 1, 47% net rate of return year 2, and then year 3 was 36% cash-on-cash return to investors or net rate of return to investors.