Across the United States, banks and other traditional lending institutions are tightening their requirements for loans on investment properties. While this runs counter to the trending demand for investment properties from the private and residential sectors, traditional lenders are navigating new territory with old guidance on risk assessment. Fortunately, there are more accessible options available for property investors.

Traditional Lenders and Risk Assessment

Traditional lenders are familiar with economic downturns, such as the recession of 2008, which centered around commercial real estate. However, the COVID-19 pandemic is new territory, and very few, if any, traditional lending institutions have a blueprint for recovery or how to handle loan requests. As a result, traditional lenders are falling back on risk assessment to protect their holdings. This has resulted in higher credit and collateral requirements for borrowers, as well as lower lending limits. Currently, traditional lending channels view investment properties as a high-risk category, making adequate financing inaccessible for those in the commercial real estate sector.

Traditional Lenders Vs. Property Demand

There is a large rift right now between traditional lenders and the demand for real estate. Property investors see a number of opportunities, driven by a need from individuals and families. Prior to the pandemic, people were looking to move into new apartments or purchase homes. The past few months have not diminished that need. Families are growing, and people need to move closer to their jobs as the economy reopens. The demand for residential properties has commercial property investors lining up multifamily apartments as well as fix and flip projects, but with traditional lenders tightening their requirements, conventional funding methods seem inaccessible.

Bridging the Gap

Fortunately, commercial real estate investors do not have to rely on traditional lenders to get the financing they need. At The Capital Rams, we specialize in financing designed specifically for investment property markets. Our team can provide the funding you need quickly and efficiently. Our years of experience in commercial real estate arena allow us to eliminate the red tape between you and the funding you need so you can purchase, renovate, or build the structures you want so you can meet the demands of people in need of housing and generate revenue in the process. Contact The Capital Rams today to learn more about our financing programs for investment properties.