Private loans are a real estate investor's best friend, but these loans are susceptible to market fluctuations and your credit history. Let's explore three private money lending trends that you should be aware of as we approach a new calendar year.

More Commercial Hard Money Loans

Now that the housing market is returning to a state of relative stability, you will probably see more commercial developments taking private loans to fund their new projects. A few years ago, this was generally not practiced due to the high amount of risk involved, but since the market has leveled out a bit, you can expect to see this trend grow despite the high default rate that accompanies these types of loans. There are high risk and high reward benefits, but given the right location and circumstances these deals can be very profitable for all the parties involved.

More Hard Loans Overseas

The majority of these loans occur in the United States and Canada; they were developed in North America as a last resort way to get capital out of property. The trend we are starting to see is an increase in these loans worldwide. Real estate is a very viable business, especially in areas with good property values. More and more international lending institutions are willing to loan their money for property investment. As long as the housing market stays relatively stable, these loans are almost no lose situations for the financial institutions involved.

Lower Interest Rates

Private money loans are going to have a higher interest rate than your traditional bank loans, but this is because you can't get these loans at banks. In the past we've seen interest rates skyrocket as high as 21 percent, and if you defaulted during the housing crisis on one of these loans, your rates could have been as high as the legal limit of 29 percent. These rates have gone down significantly as the market has achieved a level of stability. We have seen private loan rates at anywhere from 12 to 15 percent, but in the coming months these figures are expected to drop to 8 to 12 percent.

There has never been a better time to get a loan for real estate. Contact us for a private money loan if you are in the state of California. We're here to be part of your financial team!