If traditional financing options were all the real estate/construction world needed, then private lending would not exist, or at least all private lenders would be out of business by now. The simple truth is, traditional financing options will not always be the right fit for every constructor/home builder. When it comes to the renovation or remodelling with significant risks in terms of structural repairs or business plans requiring zoning, it can be quite difficult to find traditional financing willing to take on such projects.

In this reluctance, private lending has stepped in to fill the gaps and reshape the mortgage market. As a result, the market for private money lenders is huge. Moreover, it’s a national market with lucrative opportunities for private investors to step into.

It is only normal that we wonder exactly how big this private loan fund market is? How much of the market share can be captured by private loan funds? To come any closer to figuring this out, we must answer two questions.

  • How many properties are resold yearly?
  • How many of the homes sold are Flips?

ATTOMS’ end of the year report showed that Americans flipped 193,009 single-family homes and condos by the end of the year 2016. That data caters for 80% of the areas occupied by Americans. With the average cost of flipping each home put at $189,000, that amounts to a total market share of $56 billion.

The same report showed that about a third of those flips were financed, based on the number of flips recorded as cash transactions. That would mean flippers borrowed about $17-18 billion as of 2016. As such, these challenges show the enormous return potential in private lending investment in the ever-increasing market.

To find out more on private lending is reshaping the mortgage market, click here.


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