Joe Toner Private Lending

Is Private Money Lending The Next Big Thing?

Investors who buy real estate properties to renovate and resell (also known as flippers) have a difficulty financing their projects due to their limited lending options. Conventional lenders often shy away from these types of investments due to the significant risks involved.

This unsatisfied demand created a new market for other kinds of financing, most notably private money lending. Hence, we wonder- how big really is the market of the private money lending industry and where will it go from here?

To answer these questions, we need to look back at the numbers. Two important things can affect the market of private money lenders. First would be the proportion of homes sold that are actually flipped, and the second would be the average amount on which these properties are listed for.

ATTOM, a database for real estate statistics in the US, states that at least 190,000 single family homes were flipped in 2016 alone. ATTOM’S 2016 Year-End US Home Flipping Report likewise noted that these homes were sold at a median price of $189,000 each.

Basing from these numbers, we can safely assume that the private money lending industry has a massive $56 billion market every year. Compared to the current amount financed by private money lenders, it is evident that they still have a lot of room to grow.

Besides the flipping industry, other real estate markets are starting to look into private money lending as a viable source of financing. These industries include construction businesses both in the private and public business.

A steady rise in the demand for private money lending can be attributed to the various benefits this type of lending offers its borrowers. This type of credit offers flexibility and speed that no other types of loan can provide.

Through private money lending, a borrower is asked to submit fewer requirements. This makes the application process a lot faster and less complicated. Some lenders are known to approve applications within less than a week, with some taking even as fast as one to two days only. This makes it perfect for flippers because of how competitive their market is.

Most private money lending company require borrowers to present real estate properties as collateral. Hence, it is safer and more secure for the lender. For the borrower, this means that they have the flexibility to negotiate the payment terms with the lender, something that is rarely available with conventional lending.

Private money lending also has its downsides such as shorter durations and higher interest rates. However, it is undeniable that its benefits far outweigh these problems. If you want to learn more, visit Toner Real Estate Solution through their website. Toner Real Estate Solutions is the leading provider of real estate services in the Tacoma, Washington area.