The Only Truly Passive Income in Real Estate: Josh Wollaston on Private Lending

On episode 41 of The Frankie D’Astoli Show, host Frankie D’Astoli talked with Josh Wollaston, co-founder of SPG Capital. Frankie is also one of SPG’s borrowers. His firm, D&D Equities, grew to 19 houses in under a year with SPG’s financing.

Why rentals aren’t truly passive

Josh and his partner Alex built a portfolio of about 60 units using the BRRRR method and private capital. Their first market was Coatesville, PA, more than an hour from where Josh lived. Even with a property manager and a trusted local contractor handling repairs, Josh says owning rentals still takes real time.

His view is that lending is the only truly passive way to invest in real estate. The borrower buys the property, manages the contractors and handles the refinance. The investor puts in capital and collects monthly income.

How SPG started lending

Rising rates in 2023 slowed SPG’s own deal flow just as several projects were paying off. The investors behind those projects didn’t want their money back. They wanted another place to put it. At the same time, experienced local flippers were paying hard money lenders about 12% plus 4 points and bringing 20–25% down. SPG saw it could connect the two groups.

The relationship matters more than the deal

SPG lends only in Pennsylvania, Delaware and New Jersey, and only to operators it knows. Josh describes it as betting on the jockey rather than the horse. Frankie’s first meeting with Josh was over coffee, and Josh wouldn’t fund the four-property portfolio Frankie asked about until he knew him better. His test for a borrower is whether he’d be proud to tell his investors he lends to that person.

Because SPG underwrites in-house, it can often give a yes or no within an hour and close in a few days. Large Wall Street-backed lenders usually can’t move that fast.

How the fund works

• For investors: 10% for a two-year commitment or 9% for one year, paid monthly on the 15th. The fund is open to accredited investors, and IRA funds are eligible.
• For borrowers: 12% interest and 3 points.
• Diversification: each investor dollar is spread across all of the fund’s loans rather than tied to one property.
• Demand: as of the recording, the fund had about $5M raised, all of it out in loans, with more deals waiting than capital to fund them.

A warning for anyone raising money

Josh admits SPG’s early capital raising “was not 100% right.” Pooling several people’s money into a deal without a proper legal structure can create securities-law problems. Those problems usually surface only when a deal goes wrong. That risk is why SPG set up a registered fund, and he urges other investors to get proper legal advice before they raise money.

Invest in yourself

Josh’s parting advice is to spend money on your own education. He and Alex joined a $1,500-a-month mastermind, and within about three months the lessons and connections had paid it back. For newer investors, he suggests putting even $1,000 toward a course or conference so they can get into rooms with more experienced people. He adds that he’d still be working at the bank if he had tried to do it all alone.

Key takeaways

• Rentals build wealth, but for the investor, lending is the more passive option.
• Private lenders underwrite the operator as much as the property.
• Pooling investor money without a proper fund structure carries legal risk.
• Education, masterminds and partners help you grow much faster.

Interested in passive, real-estate-backed income? Book a call with Josh