Juniper Capital is dedicated to creating win-win private money loans in Seattle, Montana, Oregon, Iowa, Idaho, and throughout Northwest markets. We specialize in commercial real estate loans, construction loans, land development loans, residential real estate loans, and more. As established Seattle hard money lenders, we don’t fund a loan unless we believe all parties will be successful. Contact us today for more information about market trends, or any questions you may have about the real estate loan process.
Alternative lenders are becoming more mainstream in both commercial and residential lending.
In the late stages of the current economic cycle, the private lending industry has become increasingly crowded with more and more new entrants to the marketplace. Per the American Association of Private Lenders, the current estimated number of hard money lenders nationwide sits at approximately 8,300 – up almost 40% since 2016. While some of these lenders are individually operated, large institutions such as Blackstone and Goldman Sachs have also formed hard money divisions.
It’s important to note that a large majority of new entrants to the hard money industry are chasing the fix and flip gold rush. However, the market for fix and flip loans may not be so golden after all. Rising housing prices across the country have decreased flippers’ available margins. In Seattle, continued increases in construction costs, days on market, and fewer viable deals have drastically slowed the fix and flip industry. New lenders, in some cases loaning up to 90% of the after-repair value, could soon find themselves in hot water. Several fix and flip lenders have already run afoul, resulting in issues for existing customers – many have reported issues getting construction draws for ongoing projects.
In the commercial real estate space, alternative money lending has become increasingly mainstream as many banks have withdrawn due to late economic concerns (per Forbes). Banks are especially wary of new construction financing, making alternative lenders an important resource for developers with new projects. According to CBRE’s recent report, alternative lenders funded a record amount of commercial real estate in 2018 despite overall funding falling from $87.8 billion in 2017 to $77 billion in 2018.
Competition amongst lenders is a huge benefit for real estate investors, but as increased competition leads to an erosion of underwriting standards, the likelihood of a bubble increases. Borrowers will benefit from researching and vetting the lenders they choose to work with to ensure they avoid issues down the road, especially when shopping for a construction loan.
At Juniper Capital we believe in sincere communication and honesty. We pride ourselves on providing value to our clients, and creating relationships by providing white-glove service at the industry’s best rates. Give us a call to start the conversation with an experienced loan officer today.
