The banking crisis and hard money loans

It can be challenging for real estate investors to access bank capital during a banking crisis characterized by failed regional banks like Silicon Valley Bank, today a division of First Citizens Bank, and global money center banks like Credit Suisse, which recently merged with its Swiss competitor, UBS.

In an environment of rising inflation, declining property values, and rising interest rates, hard money loans secure capital for new investments or act as a bridge to more stable market conditions. Short-term hard money loans are exceptional financial solutions for investors who can borrow from a strongly capitalized and trusted hard money lender that understands local real estate markets. Reputable hard money lenders should have sufficient private capital liquidity to help investors improve, resell, lease, or bridge their real estate investment properties. 

Hard money loans help investors beat rising inflation and declining property values during a banking crisis by providing private capital for real estate investments. We appreciate the uncertainty during a banking crisis and the value of real estate property investments as a hedge against a banking crisis. We also appreciate that while a banking crisis could affect the availability and terms of conventional funding, hard money lenders can provide tangible value for investors who utilize hard money loans to mitigate the uncertainties of a banking crisis. We provide hard money loans during a banking crisis.

Banking volatility and hard money loans

We are mindful that the banking crisis that led to a prolonged U.S. recession in 2008-2009 had a ripple effect throughout the global economy leading to higher levels of unemployment, lower consumer spending, and a declining business environment. While it is too early to tell, the prompt response by the central banks and government regulators in stop-gapping several regional and global money center banks may reduce depositor fears and contain the volatility; however, uncertainty remains.  

Experienced real estate investors respond to banking instabilities by understanding that hard money loans are well-suited for real estate investments. Intelligent investors also understand that securing capital and closing transactions from conventional banks is challenging. Unlike conventional lenders who utilize institutional capital based on the fed rate, hard money lenders utilize private capital for real estate investors who can secure investment properties without being overleveraged or overvalued. Smart real estate investors understand how to buy investment properties by accessing capital from reputable hard money lenders. 

Knowledgeable residential and commercial investment property owners, flippers, and lessors work with reputable hard money lenders to mitigate banking volatility. Rising inflation and volatile capital markets make hard money loans even more affordable than conventional financing. Even better, the costs of hard money loans are offset by the loan’s shorter duration and the resale or holding value of the improved real estate property. We provide hard money loans during banking volatility. 

Banking bailouts and hard money loans

Depositors often panic, and investors regularly flee from a commercial bank that receives a central bank or government regulator bailout to prevent the collapse of a bank. A bank’s financial distress and the threat of insolvency create bailout conditions to stabilize the bank’s operations and balance sheet. As a measure of last resort, a bank bailout is sometimes seen as necessary to prevent a broader economic collapse or financial crisis.  

Nevertheless, the uncertain conditions surrounding a banking bailout often prompt investors to move their funds from the banking system into real estate asset-backed investments. Investors also know that real estate investments remain a strong hedge against rising inflation and the uncertainties surrounding bank bailouts. Experienced real estate investors confidently invest during the infrequent periods of bank bailouts to move their capital into more stable real estate investments. 

Savvy real estate investors turn to hard money lenders to use their private capital resources and hard money loans for new real estate investment acquisitions and a bridge to more stable market conditions. Real estate investors can confidently work with hard money lenders to secure investment capital during bank bailout market conditions. Reputable hard money lenders help borrowers manage market uncertainties by closing deals with private capital. Astute borrowers work with stable, steady, and reputable hard money lenders to close deals in uncertain markets. We provide hard money loans during banking bailouts. 

Banking contagion and hard money loans

The failure of a major bank like Credit Suisse could have significant ripple effects on the global financial system. A large and complex bank like Credit Suisse with significant global operations could trigger a range of negative consequences, including significant investor losses and loss of confidence in the broader financial system, potentially triggering a contagion that could spread to other banks and financial institutions. 

While there is no consensus of a banking contagion, interest rates continue to rise, asset prices fall, and real estate prices in Florida remain less volatile than in other U.S. markets. Complex markets motivate experienced real estate investors to secure and close hard money loans for real estate investments. Despite the non-zero risk of a banking contagion, rising inflation, and settling real estate values, millions of U.S. and international families and investors see Florida as a desirable location to live and invest. Experienced real estate investors beat inflation by buying right, borrowing smartly, and working with reputable hard money lenders who access capital for real estate investments and the steady demand for residential housing and commercial properties in Florida and other select U.S. cities.

During contagion risks and rising inflation, intelligent real estate investors invest in real estate to balance higher-risk investments in stocks, bonds, and cryptocurrencies. Rational real estate investors use hard money lenders with private capital to financially structure their deals for multiple disposition opportunities like sales and short and long-term rentals. We provide access to capital during times of banking contagion risks.

Why DKC Lending? 

DKC Lending offers hard money lending services to residential and commercial real estate investors in Florida and select cities throughout the United States. We provide borrowers with personalized loan origination services and funding. DKC is direct to lender, which allows us to match the borrowers’ hard money loan needs with the best funding source for their deal. Our real estate development experience allows us to offer our borrowers a unique collaboration on every loan. We offer a high level of individual consulting, including a review of deal analytics, rehab budgets, refinancing parameters, and deal viability. DKC has a proven track record of successful underwriting and closing deals and brings an extensive real estate development background and expertise to help guide borrowers on each unique transaction. We provide access to capital during banking crises, volatility, bailouts, and the risk of a contagion that could threaten the global banking and financial system.