There continues to be a lot of opportunity in the private lending space, according to Matt Burk, CEO of Fairway America, and that underwriting standards are loosening, which he thinks will not be beneficial to some private lenders in the long run. The pendulum has swung hard from money being hard to come by to lots of people being in the business and they are accepting less return for more risk, with underwriting standards deteriorating. Burk sees this trend continuing through the next year.
With so many private lenders, it's working against them, says Burk, because so many are jumping back into the space so aggressively. The credit facilities are also coming back, providing more access to capital than there has been for quite some time, a trend which he sees continuing as well for the next year.
Burk believes alternative investments will continue to grow rapidly and sees an increase of private money coming into all types of deals, not just private lending. He also thinks that a lot of people don't know what they're doing and don't how to look at them and assess risk very well, so there will be some "lambs slaughtered" as people make money. It's going to be a "bull market in the small balance real estate space and private lending space" for the next few years, Burk says.
Burk sees opportunity right now in small balance real estate funds. These funds, that for years could not advertise or solicit and as such, a vast majority of credit investors don't know they exist, will come significantly to the forefront in the next few years. Overall, he believes the investors will be winners if they are smart enough to pick the good from the bad.
Fairway America is an advisory and consulting practice helping small balance real estate people, including private lenders, note buyers and distressed debt acquisition people, in setting up their own proprietary fund. In doing so, they help them architect, structure, create and launch the fund, which Fairway America administers.
Matt Burk, CEO of Fairway America spoke with Alternative Investing News, providing online alternative investing video news content. Alternative Investing News is a featured network of Sequence Media Group. This video was brought to you by Vantage Self-Directed Retirement Plans.