Operations
Now is the Time to Leverage HOUSING AVAILABILITY, AGE, AND CONSTRUCTION GAPS GIVE INVESTORS AN EDGE WHEN POWERED BY PRIVATE CAPITAL.
CHRISTIAN FAES
R eal estate investing is an attractive investment for most people. Whether you’re seeking passive income or to diversify your investment portfolio, real estate has been the investment of choice for many investors. Investing in real estate requires financing. You will typically need to deal with a mountain of paperwork and tick several boxes to obtain bank financing. Banks are also usually very slow when it comes to providing a loan. If you are a real estate investor looking to capitalize on a real estate opportunity quickly, then getting finance from a bank might not be a workable solution.
MARKET SIZE AND INSTITUTIONALIZATION The U.S. private lending market has grown during the last couple of decades. Key industry observers (including major industry organizations and advisory firms that track fix-and-flip financing) suggest that as of the early 2010s, total private lending volume for short-term residential projects was in the small tens of billions of dollars annually. Although the private lending market cooled to a degree in the latter half of 2022 (much of this attributed to rising interest rates and broader economic uncertainty), there is still a consensus
Private lenders can offer a more streamlined offering because they aren’t burdened with the regulatory and capital requirements banks must deal with. Private lenders can provide flexible financing solutions in an extremely nimble way compared to traditional bank financing. Recent figures show that private lending is well on the rise and is something that today’s real estate investors should consider. Private lenders are key funders in the U.S. fix-and-flip market and also provide other short-term real estate solutions such as bridging finance.
20 | think realty magazine :: may - june 2025
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