The Role of Alternative Lending in the CRE Marketplace
The commercial real estate market is expanding, allowing for both new property investors and seasoned professionals to generate revenue. From small rental units on up to large construction projects and everything in between, the commercial real estate market is ready for transactions of all shapes and sizes. Yet when it comes to financing commercial real estate, alternative lending solutions have taken the leads over traditional loans.
Banks and Perceived Risk in the CRE Marketplace
For the past decade, banks have considered commercial real estate to be a high-risk market, and have raised the requirements on loan programs to push aside all but the most experienced and established property investors and developers. The reason for the high requirements is that banks want to protect themselves against another commercial real estate recession. What many outside of the CRE marketplace forget is that banks created and burst the last commercial real estate bubble with their own lending practices. Additionally, with seemingly arbitrary interest rate hikes on loans coming from the Fed, commercial real estate investors are wary of using traditional lending channels to finance property transactions.
Alternative Lending is a Natural Evolution in the CRE Marketplace
Prohibitively high requirements, long processing times, rate hikes, and more remain the hallmark of traditional lending channels. The fiscally conservative stance of banks to stave off an economic downturn has actually hindered success in a very lucrative market. Solutions were needed, and banks weren’t offering them. Alternative lending rose to the top and has become the preferred method for property investors and developers nationwide. The reasons for the role of alternative lending in the CRE marketplace are many. First, alternative lending is typically provided by lenders who have a deep understanding of commercial real estate, and can provide solutions tailored to the needs of borrowers. Because alternative lending solutions are not restricted by the usual bank bureaucracy, funding can be arranged and disbursed much more efficiently to keep transactions and projects on track. Also, the requirements are not prohibitively high. First-time property investors can get financing easily. House flippers can find funding. Property developers can get the continued financing they need for large construction projects. Scalability is just as important as accessibility and affordability, and alternative lending provides what banks and traditional channels cannot.
CounselPro Lending offers a wide range of solutions to help people find success and growth in the CRE marketplace. From conventional loans to bridge financing, mezzanine solutions, and construction loans, our team will work with you to create a strategy tailored to your needs, so you can reach your goals and start generating revenue. Contact our offices today to get started.