It’s been a while since we reached out to you. It feels like I had just wished you a Happy Christmas 2017 when I began this Bulletin, and now it’s almost time to wish you a Happy Christmas 2018.
In fact I did, and it is!
Today, I’ll very briefly cover two topics and suggest that you call with any queries. A phone call is realistically the only way to find out if your scenario suits our current requirements and capacity.
- Banking and Institutional Funds Tightening
We are all aware that the nature of the banking and institutional lending market has changed dramatically in 2018.
This as been a very busy time in genuine private mortgage lending – where one person/family/private company is the sole investor. Many, “non-code” (refer NCCC) loans which would previously have been available via banks or other institutions no longer fit their criteria for a variety of reasons.
As a result, due to the increased quality, those investors already involved in the private market as direct lenders may be prepared to consider larger individual exposures (though at LRPM we still prefer the $0.50M to $4.00M range, and preferably for completed product). In addition, it also appears that there are now more private investors prepared to consider lending into the market as part of their investment portfolio.
Given the short term nature of real private mortgage loans and structured finance arrangements, more “high end” borrowers are prepared to accept that the premium pricing (within reason) of the private market as a “cost of doing business” for profitable outcome – rather than potentially no outcome. In the end, Return on Investment and Internal Rate of Return are the key factors for both investors and borrowers. Still from a borrowing viewpoint, the fact is that frequent inter-action/consultation during the course of a loan is often required. Things change and early reaction is important. With institutions, this often involves using a sledge-hammer to crack an egg. Without strict guidelines, a mutually satisfactory, individual and commercial approach is more likely to be available through private negotiation, without the hindrance of credit committees or other external restrictions.
As far as LRPM is concerned, each potential transaction starts as a clean sheet - bridging, “opportunity” funding, smaller developments, left over stock, or whatever the purpose of the private loan, the borrower’s benefit, ROI/IRR and strong exit strategy are our key drivers.
Obviously, as demand for genuine private funding is strong, so must the loan proposals be, and the key to standing out in the pack is presentation by our Introducers.
- Borrower/Investor Web “Matching Platforms” - for Private Lending?
For some years, there have been web sites devoted to matching borrowers and “private lenders”. No doubt these have a place. In our view, more for transactions seeking placement in “mortgage funds” or the like, where standard terms and pricing apply.
However, genuine private lending is a different animal. Investor appetite to even consider the proposal is primary, and from there, other factors are relevant. There is a direct relationship between borrower and investor. Each proposal begins as a clean canvass via a phone call or email – there is no loan matrix; no standard terms, conditions nor pricing. Direct communication is essential from the outset from the Finance Broker, Borrower, or other Introducer. It is impossible to set out all relevant factors on “Matching Platforms”.
Previous experience with LRPM, or referral from those with that previous experience is the only way to begin the conversation.
Please visit our web site www.lrpm-aus.com to find out more. We’re a phone call away.
Steven Acworth
This as been a very busy time in genuine private mortgage lending – where one person/family/private company is the sole investor. Many, “non-code” (refer NCCC) loans which would previously have been available via banks or other institutions no longer fit their criteria for a variety of reasons.
As a result, due to the increased quality, those investors already involved in the private market as direct lenders may be prepared to consider larger individual exposures (though at LRPM we still prefer the $0.50M to $4.00M range, and preferably for completed product). In addition, it also appears that there are now more private investors prepared to consider lending into the market as part of their investment portfolio.
Given the short term nature of real private mortgage loans and structured finance arrangements, more “high end” borrowers are prepared to accept that the premium pricing (within reason) of the private market as a “cost of doing business” for profitable outcome – rather than potentially no outcome. In the end, Return on Investment and Internal Rate of Return are the key factors for both investors and borrowers. Still from a borrowing viewpoint, the fact is that frequent inter-action/consultation during the course of a loan is often required. Things change and early reaction is important. With institutions, this often involves using a sledge-hammer to crack an egg. Without strict guidelines, a mutually satisfactory, individual and commercial approach is more likely to be available through private negotiation, without the hindrance of credit committees or other external restrictions.
As far as LRPM is concerned, each potential transaction starts as a clean sheet - bridging, “opportunity” funding, smaller developments, left over stock, or whatever the purpose of the private loan, the borrower’s benefit, ROI/IRR and strong exit strategy are our key drivers.
Obviously, as demand for genuine private funding is strong, so must the loan proposals be, and the key to standing out in the pack is presentation by our Introducers.
However, genuine private lending is a different animal. Investor appetite to even consider the proposal is primary, and from there, other factors are relevant. There is a direct relationship between borrower and investor. Each proposal begins as a clean canvass via a phone call or email – there is no loan matrix; no standard terms, conditions nor pricing. Direct communication is essential from the outset from the Finance Broker, Borrower, or other Introducer. It is impossible to set out all relevant factors on “Matching Platforms”.
Previous experience with LRPM, or referral from those with that previous experience is the only way to begin the conversation.
Please visit our web site www.lrpm-aus.com to find out more. We’re a phone call away.
Steven Acworth
