Five years after the start of the real estate crash, banks are nowhere to be found when it comes to fueling the much-anticipated recovery in the real estate market. With the exception of consumer home loans, banks for the most part have exited the residential lending arena – at the same time that foreclosures have hit all time highs.
Ask any real estate investor buying REO, auction or short sale properties at well below market prices – and you’ll find that they are either paying all-cash (their own or equity partners cash) or they are using the services of a private (aka hard) money lender.
To fill this void, in the last several years, hundreds of millions of dollars of private, non-bank capital has been flowing into the real estate market in the form of both equity and debt. So much so, there is now an abundance of cash looking to be placed in deals priced right.
(If you do not have access to an endless supply of cash for your deals, make sure you join our free special event webinar “How to Attract Private Money to Fund Your Deals” so you can hear the details from the Money Guy himself.)
Don’t believe me? This just in from Bloomberg “Private Equity Has Too Much Money to Spend on Homes”:
Investors are trying to spend at least $6.4 billion on single-family rentals, including from funds such as Colony Capital LLC, GTIS Partners, KKR & Co., Oaktree Capital Group LLC (OAK), Och-Ziff Capital Management Group LLC (OZM) and the Alaska Permanent Fund Corp. They want to take advantage of U.S. home prices that are 35 percent below the 2006 peak and growing demand for rentals as the homeownership rate sits at the lowest level since 1997.
Oliver Chang, who estimated last year that 7.5 million homes with a market value of $1 trillion would be lost to foreclosure by 2016, left his job as an analyst with Morgan Stanley in May to start a fund investing in rental homes. “We are seeing tremendous interest in our fund from investors, and expect to close on a significant allocation shortly,” Chang said in a departure note to his colleagues.
A $25 million fund raised by Delavaco Properties Inc., a Fort Lauderdale, Florida-based owner of about 450 single-family properties, was “more than two times over-subscribed” with investors drawn to the 7.5 percent interest on the debt plus options to buy shares of the company, said Chief Executive Officer Andy DeFrancesco. The firm plans to go public, with a listing on the Toronto Stock Exchange, late this year, he said. (Private Equity Story)
Now more than ever, if you have a great deal, the money is waiting for it. As “Money Makes the World Go Around” right now there is more money looking for a home than ever before. Learn how to get your hands on your own money, so you can buy every great foreclosure deal you find, in our Brand New Free Live Investor Training Webinar here.
On the debt side, the private money lending industry has grown dramatically nationwide. Many Major metropolitan areas in California have some of the least expensive private money loan options in the nation thanks to the tremendous amount of local wealth seeking higher yields.
The beauty of this phenomenon is that it’s proof of how free markets abhor a vacuum. The banks, by exiting investment lending, left a void that is being filled by the capitalistic and entrepreneurial efforts of a small segment of real estate professionals. Hundreds of new private money lending firms have emerged post-crash to fuel the capital appetites of real estate investors.
The recovery in the real estate market is happening right now and is driven by real estate investors who are re-positioning the millions of foreclosed and soon-to-be foreclosed properties nationwide. The government can’t do this. The banks can’t do this. And consumers can’t do this.
Only savvy real estate investors have the proper incentive to effectively re-deploy residential housing can do this.
But in order to help fuel this much-needed investment activity, investors need ready access to capital. While some investors have access to large sums of cash, most do not, and they are turning to the private equity and lending community for help.
At Foreclosures.com we believe that lasting wealth is created through smart real estate investing. And savvy investors know how to buy it right, use leverage smartly and sell it for a nice profit when the time is right. Have you used Private Equity to fund your deals? Do you know where to find it? Let me know below.
Whether you are a new investor, or been investing for a while, you will need access to money to fund your deals. If you want help Attracting Private Equity Money to Fund Your Deals, register and join us this Wednesday for our Free Live Special Webinar Event.
We will have the Private Equity Money Guy himself on this Call. You won’t want to miss it.
Read more about Private Equity Money:
- Private Equity = Opportunity and Responsibility
- Private Equity Money “Rising Interest Rates Cause Surge in Foreclosures“
- Private Equity Money, Funding Foreclosure Home Buyer Surge
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