Private lender discussing the hard money loan contract with borrower. Miniature house next to clipboard.

Unless you have been living under a rock, then you most likely have heard a thing or two about the current conditions of the housing market. And depending on who you’ve talked to, you probably have gotten a lot of conflicting answers. The thing is, these conflicting answers may not be the result of misinformation, but rather the result of your current situation.

Are you a buyer? A seller? A renter? A Flipper?

Market conditions will depend greatly on your situation, but if there is one thing that is ubiquitous across the board, it’s that money did become more expensive as interest rates have increased. So what does that mean for private lenders and potential borrowers? Let’s dive in.

Hard Money Lenders

In the last ten years, the industry has seen an emergence of financing options for bridge loans, fix-and-flips, and new construction loans. They have become known as “hard money ” or “private lending,” but if you want the super fancy industry term that they use on Wall Street, these types of loans are referred to as residential transition loans or “RTLs.”

Hard money loans provide investors who do not have or wish to deploy all of the cash required to fund and renovate a property. These types of loans provide investors with the ability to compete with cash buyers while utilizing just a fraction of out-of-pocket cash. Investors use hard money for house flips, rental properties, renovations, construction, multi-family housing, and commercial endeavors.

Let’s Talk Wall Street

Before we get into the current conditions of the market, let’s talk Wall Street. This is where an almost infinite amount of money has been poured into the market. Billions upon billions of dollars were infused into fancy-sounding “bond securitizations” as Wall Street chased the higher yields of these 12-month term loans. The housing market seemed bulletproof, so they raised more and more money through securitizations, and everything was great…right?

Fast forward to today and the current conditions of the housing market. Talks of inflation, recession, fear of a housing bubble, and a steadily declining stock market rapidly becoming a “bear market”.  It’s a scary and unprecedented time for both pros and amateurs alike.

The Takeaway

So what is the takeaway from all of this? Well, as we mentioned previously, money got more expensive. “The Fed raised rates again” is all we hear and just like in traditional residential mortgages, the rates went up, up, up!

Some of the companies buying these RTLs stalled, paused or even vanished. As a result, many lenders who rely on selling those companies their borrowers’ loans also stalled, paused or vanished.

You might be reading this and thinking that everything we just mentioned sounds scary, right? And for some, it certainly is. However, we are truly pulling for them all to come out of this disruption intact.

What Does This Mean For HouseMax?

Despite these crazy and unprecedented times, we do have some good news! HOUSEMAX IS STILL FUNDING! We will spare you the details of how the hard money sausage is made at HouseMax Funding, but here is what you should know: the company leverages relationships with the Wall Street gang and other funds with committed capital from insurance companies and pension funds. Additionally, we continue utilizing Housemax Funding’s own privately raised capital, as well as other strategic alliances which provide for a well rounded, redundant ability to stay in business when private lending gets publicly hard.

We aren’t going to sugarcoat anything for you, so here are some straightforward and honest answers to your most pressing questions: 

  • Are rates higher than 6 months ago? Yep!
  • Do you need to put a little more money down? Sure do. 
  • Will we fund your deal if it appears to be a profitable pursuit? Yep!!!!

Here at HouseMax, we like to maintain honest and transparent relationships with current and potential investors so that is why we want to make sure you are well aware of how our business is adapting to current conditions. If you have any questions, contact us today!

We get you.
We got you.
Let’s go!