A single 2019 crowdfunding position that closed at 9.1 percent net IRR compares better to active recycling than it looks

The idle drag thing is real and I do not think most people price it in at all before they commit. I have been sitting on dry powder for about eight months now trying to figure out where to put it and even that is costing me in real terms, not just opportunity cost theoretically but actual inflation erosion on a pile that is not moving. At least I know what I am losing. The people cycling through short notes probably cannot even tell you what their true blended return is because the math requires them to account for every gap and most platforms do not surface that number cleanly.

What I keep getting stuck on is the reinvestment assumption embedded in how these platforms advertise projected returns. They are almost always quoting you a number that assumes instant redeployment. Nobody I have talked to has actually achieved that in practice, not without accepting deals they would have passed on otherwise, which is just a different kind of drag with more paperwork attached to it. Your 9.1 over five years with zero decisions after the first one is honestly a cleaner data point than most people have. I have been watching this asset class for two years and I still cannot find a comparable clean single-position number from someone I actually trust to be honest about the outcome.

Nine percent compounding uninterrupted for five years beats a lot of 12 percent projections that never actually compounded.

What was the all in tax drag on that single K-1?

Disagree a little actually. A 9.1 net over five years starting in 2019 means you caught a window where the macro did a lot of the lifting, rates were still cooperative for most of that hold, and the exit was not fighting a 7 percent risk-free environment the way anything closing right now is. The idle drag comparison is fair but the baseline you are measuring against matters enormously. Someone cycling six deals between 2021 and 2024 was dealing with extension risk, rate cap costs, and sponsors pushing out timelines in ways that do not show up cleanly in IRR. Your approach was not wrong, and it is the one most careful investors would pick, but be careful about drawing a repeatable lesson from a hold period that had a lot of tailwind baked in.

The concentration risk here is the thing nobody wants to say.

One note, one borrower, five years, and you are calling it patience.

If that borrower had gone sideways in 2020 you are not writing this post.

The part that always gets underweighted is deal selection time. That active person cycling through six deals spent real hours underwriting each one, and that labor has a cost even if nobody invoices for it.

I ran a small note position in 2021, spent probably 40 hours vetting three deals, picked two, and the one I passed on outperformed both of mine by about 180 basis points. The hours were a loss on top of the underperformance.

9.1 with zero decision fatigue after entry is a number I'd actually take seriously.

Idle drag of 2.3 points hits harder in slower moving markets like secondary cities, where note turnover is genuinely sluggish.