Optimism abounds but loan opportunities dwindle, that has been the trend for three years now and it has only worsened in 2017. The real estate market lacks inventory and prices continue to climb fairly quickly month over month. As such it is my feeling that the value or profit to be found in real estate investing is lower than it has been in many many years. We must proceed with caution.
There has also been significant interest rate depression because of new competitors in the market which are utilizing hedge fund money to offer extremely low interest rates in the hard money arena. They have access to cheap capital which allows them to offer 6-8% interest rates, far below the historical hard money norms of 9-12%. In the long run I believe this will be disastrous and that is why we will not reduce our interest rate demands to try and compete. During the next inevitable recession they will likely take significant losses and since they are receiving conservative interest rates of return they will not have earned much profit to offset the potential losses. For the sake of our investors I am trying to avoid that trap.
As a company we have had to turn away numerous new investor inquiries and now also have a significant waiting list for our current investors to deploy capital. This is far from ideal but in this investment environment I continue to believe that sitting on cash is far safer than pursuing sub-optimal Trust Deed opportunities. Your patience is appreciated, in time the market should normalize and when it finally does we'll be here to assist full speed once again.