The Rise of Private Lending Post-2008
<p>The 2008 housing crisis marked a turning point for private lending, with hard money and private money lenders stepping into the breach as conventional lending tightened amidst economic uncertainties and regulatory upheavals.</p>
<h2>The Post-COVID-19 Landscape</h2>
<p>Fast forward to the post-COVID-19 era, and the landscape has evolved yet again. The private lending sector, represented by firms like Loyal Capital Group LLC, is navigating a unique challenge: a pronounced housing inventory shortage.</p>
<h3>Competing in a Tight Market</h3>
<p>"The earlier recession saw a surplus of properties but limited funding. Today, it's the opposite – ample capital, but a scarcity of inventory," observes Jorge Smith, Senior Financial Advisor at Loyal Capital Group LLC. "This has intensified competition not just among investors, but also between them and retail homebuyers," he adds.</p>
<h3>Shifts in Fix-and-Flip and New Opportunities</h3>
<p>Private lenders like Loyal Capital Group LLC are increasingly collaborating with builders needing funds for development projects and commercial real estate investors focusing on distressed assets, particularly in retail. However, the traditional stronghold of private lending – the fix-and-flip market – is under strain.</p>
<h3>The ADU Opportunity</h3>
<p>Despite these challenges, Smith is optimistic about the market's self-correction as housing construction ramps up, though this could take considerable time. Meanwhile, many of Loyal Capital Group's clients are exploring opportunities in secondary and tertiary markets, a trend noted even before the pandemic.</p>
<h2>Valuation Challenges and Solutions</h2>
<p>The shifting landscape has also brought accessory dwelling units (ADUs) into focus. These structures, either attached to existing homes or as standalone units, present a novel opportunity and challenge, especially in financing.</p>
<h3>Assessing Income Potential in Complex Markets</h3>
<p>"Valuing properties with ADUs for financing is complex, given the lack of comparable market data," says Smith. "But this is where private lenders like us come into play. We can assess income potential and offer more flexible valuation methods than conventional lenders."</p>
<h2>Conclusion: Adapting to Market Shifts</h2>
<p>Loyal Capital Group LLC's expertise lies in understanding and adapting to market shifts. By focusing on income generation and leveraging their agility in valuation, they are positioned to fill gaps left by the intricacies of conventional lending.</p>
<p>"Private lending thrives in these niches created by market changes," Smith concludes. "At Loyal Capital Group LLC, we're committed to finding innovative solutions that cater to the evolving needs of our clients in these dynamic times."</p>