Menu Close


Jody Hedrick

Hi everyone I’m new to the club, and I’m here to lend money. I have a question. Is it better to get paid monthly or yearly? what are the pros and cons of each? I heard if you get paid monthly you have to pay taxes on that money that year, but if you wait till the end of the year, you pay taxes next year. I also should mention that I am not yet in the whole life insurance yet, apparently my sugar is higher than they would like, but I’m going to a specialist to get that under control. I think one of the pros of getting payments monthly would be that if I loaned out 100,000 and got back 35,000 so far and someone wanted to borrow 35,000, I wouldn’t have to wait till the end of the year to lend out more money. Please share your thoughts on this topic, I value your opinions, thanks in advance.


  1. Chris Naugle

    Great question and welcome to PMC.  I prefer to get paid monthly on all my loans so it helps my cash flow.  From a tax persepctive it shouldnt matter unless it crosses into another year.  For example if you do a back end interest deal and its done Oct 2023 and then you get paid your interest n 2024 well that could be advantagous to some people.  Time to get that sugar down but we will be here when you are ready.  Again I personally like monthly interest it just feels better to me and I like it.

  2. Jonathan & Joaquin

    Awesome question and welcome to the community! I don’t like the answer I’m going to give because it’s overused, but it honestly depends. It depends on your cashflow situation. Will you need the cashflow for the duration of the loan? To your point, if you loan out 100k and received 35k you can use that towards other deals/opportunities, which then begs me to ask, are you putting all of your eggs in one basket initially or are you well diversified? If diversified appropriately then you’ll likely have loans that come due at different intervals which will allow you to participate in upcoming deals throughout the year. I too like the idea of monthly cashflow as it just ‘feels better’ and monthly mailbox money for me is the way to go.

  3. Noah Harris

    Hey Jody,

    One of my mentors many years ago told me to always ask for monthly payments.  If something happened to the borrower where he or she couldn’t make the monthly payment the lender can start the foreclosure process (if the funds were secured properly).  Imagine driving by the property you funded 3 months ago to find no work being done, the grass overgrown, and starting to panic like wth is going on.  If all the interest was due say at the end of a 12 month term, technically the borrower isn’t in default.   It’s super common for borrowers to ask for interest to be paid at the balloon date, refi, or sale of the property though for cash flow purposes.  A great meeting point is for a portion of the monthly interest to be paid and the rest to be paid at the balloon date, refi, or time of sale.  I share a case study like this in the Accelerator Coaching Program through PMC.  If you’re interested in learning more we’d love to see you in the class.