When banks all but stopped lending in 2008, cash was king. The FDIC’s bank task forces were shutting down banks daily, and those who were holding cash were the winners. But because so much cash was tied up during that time, private and hard money lenders had to step up to lend on distressed assets coming from the FDIC and other banks. This badly needed liquidity coming from private money loans during those years, allowed those bad assets to float down the real estate food chain to smaller real estate investors. And this is how the toxic real estate market in the U.S. began its slow recovery.
Since the beginning of 2010, banks were prompted to slowly start to lend again by both TARP and the no cost loans from the Fed. Although even the most qualified borrowers are still being declined at the bank, banks started to come back on the lending radar again. But even as banks slowly began lending again, private money and hard money lenders have been claiming a larger and larger percentage of the “marketshare” for loans in today’s real estate marketplace.
For serious real estate investors, hard money loans have enabled them to make handsome returns on their investments in recent years. The ability to negotiate a good deal on a piece of real estate is nothing without the ability to put up the cash needed to acquire it. Hard money lenders are willing to lend on vacant properties, or those in need of repairs, while banks only lend on stabilized, income-producing properties. Even real estate investors with plenty of cash on hand have been able to do more deals by using hard money loans. Rather than purchasing one property, investors have been able to purchase four or five properties simultaneously by using hard money loans.
In fact, without the willingness and ability of private money lenders to make loans during 2008 and 2009, the real estate market would certainly not have recovered as quickly as it did. Private money lenders have injected billions of Dollars in private money loans into the economy since 2008. I wonder where our economy as a whole would be today without these non-bank lenders? I don’t believe our economic recovery would be so far along if it weren’t for the availability of private capital. What is your opinion?
Corey Curwick Dutton, MBA. Real Estate Lender for Private Money Utah
Corey Ann Curwick is a private money consultant for Private Money Utah, a real estate lender based in Salt Lake City, Utah. Corey is from Austin, Texas and is an MBA Graduate of the prestigious Thunderbird School of International Management. An authority in the private money lending industry, Corey provides educational resources for investors who use hard money loans in their real estate investing activities. Before she joined Private Money Utah, Corey was the President of an investment education company in Utah called Bray-Conn Investments LLC. In this role, Corey organized classes, which taught investors how to invest in five asset classes. In her free time, Corey enjoys skiing, snowboarding, and mountain biking in the beautiful Utah outdoors.