The present banking and financial crisis is creating a growing demand for alternative financing sources. Banks are particularly bearish toward real estate investors, many of whom are seeking financing to leverage their acquisition of bank-owned properties. Of those banks who are still considering investor loans, many won’t loan to you if you own more than four leveraged investment properties.

The result is that we in the private money lending business are seeing higher quality loan applications. People with strong credit, experience and cash are turning to private lenders in order to take advantage of the best buying opportunities in a generation.

When you add to this the fact that valuations have significantly “normalized”, and that we currently underwrite to more conservative valuations, what you have is a market where your Trust Deed investments are not only backed with more reliable protective equity, but your borrowers in many instances are now stronger and more creditworthy.

We’re writing loans to investors who are negotiating purchases of homes in certain Northern CA markets at 20% of 2005 valuations. That’s an 80% devaluation from the high-water mark. At these prices, the homes will cash flow even when leveraged at 65% using a private money loan.

Instead of sitting on the sidelines, smart Trust Deed investors are taking advantage of these new market conditions and funding loans that have more safety factors than have existed in years.

Author: Mark Hanf

CA. DRE # 01811186 | NMLS No. 331091

Mark is Founder, President, and CEO of the San Francisco Bay Area-based Pacific Private Money Group of companies. Pacific Private Money Inc., the flagship company, is an alternative real estate mortgage lender founded in 2008 to provide consumers and real estate investors access to fast, reliable, and convenient capital.