Hard Money Market Update – 5/1/20 – Covid 19

hard money market update

In this video I talk about the current state of the hard money lending space.  There is a lot of confusion going on as we all deal with a new world brought on by the pandemic.

Why isn’t your hard money lender lending? Because they we’re lending their own money like I do. They would sell your loan immediately post closing to an “aggregator” or private equity shop.  A lot of these “lenders” used to be brokers and now they are back to brokering loans…to me! ABL is a balance sheet lender with its own funds to lend. That’s a major difference. I don’t need approval or funding from a 3rd party.

What are the new rules for hard money? All loan requests will be dealt with on a case by case basis. I’m going to focus on geography. I want to be lending in areas with strong supply and demand characteristics, markets that were resilient in the Great Recession. My hard money loan program will target LTV’s of 60-70% to make sure I have cushion if the housing market experiences sharp value declines.  The good news is for sale housing inventory is low. I know from my research that housing markets decline over time, they don’t plummet over night. Adding historically low rates to the equation means there will be end buyers and values shouldn’t decline like they did coming out of the housing crisis.

 

 

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