that, we should follow the data, understand what it means, and use it to predict where we’re going.
bigger players, aggregators, and capital providers in the space are sig- nificantly down. Private lenders with balance sheet control have the ability to lend and are closing that gap, but since they will naturally be smaller, they are unable to completely close the bridge lending gap. WHERE ARE WE GOING? We are headed very shortly to the “new normal.” Although current interest rates look ridiculously expensive, historically they are av- erage. When interest rates stabilize, concern will turn to what, if any, downturn will occur in real estate . We have two very competing data points. On one hand, we have a rising interest rate environment that will continue to contract capital and, on its face, should make prices of items, including real estate, decline. On the other hand, more than 90% of homes have an interest rate under 6%. This should reduce the mobility of people who would rather keep their current interest rate rather than opt for what they can get currently. So, we will see either a reduction in the increase of real estate values
across a lot of segments, or there’s a possibility of a much smaller correction than anticipated. There is still plenty of money to get bridge deals done. Although the larger capital aggregators may be merging or going out of business, private lenders with balance sheet control should be willing to lend on your deals. They may be more ex- pensive, but the deals will get done. If I can help you in any way, please reach out to me or any- one at Geraci. •
FOLLOW THE DATA To get a good sense of where lend- ing is going, I turned to my partner in Geraci, Nema Daghbandan. He is the CEO of Lighting Docs (http://www. lightningdocs.com), our document generation platform that does in excess of $1 billion in loan documents each month. The second quarter of 2022 was by far private lenders’ best quarter. That’s not a huge insight, because we all know what happened in third quarter: Interest rates rose rapidly, constricting the flow of capi - tal, private lending notwithstanding. “What we saw is that even the latest quarter, Q2 of 2023 is still 24% down for bridge lenders from the second quarter of 2022,” Dagh- bandan said with regard to the data Lightning Docs possesses. WHAT DOES THAT MEAN? Although the bridge lending space is down 24%, it doesn’t parse the data in specific enough detail. The
Anthony Geraci, Esq., is the CEO and a partner at Geraci, in charge of firm strategy and development of Geraci’s team and culture. An avid public
speaker, he was named to the 2022 Southern California Super Lawyers list, a designation given to only 5% of attorneys. Geraci is skilled in mortgage lending and securities law and has written numerous articles on real estate finance and security subjects. He is a leader in creating national mortgage pools and mortgage funds as well as sophisticated net branching arrangements among several mortgage companies. He currently manages Geraci’s litigation team. Geraci serves as a mentor to the various legal and media departments, spearheading problem- solving and growing employees to perform to the best of their abilities. In 2018, he wrote the book “Earning Money While You Sleep.”
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