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Private Lenders Come Out of the Shadows, Fund New Developments

National
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Private lenders are moving to center stage in real estate financing—shedding their sketchy, Vito Corleone-vibe as cash inflows help to legitimize the sector.

Investors are putting more cash into private sources in search of higher returns—they loan to riskier developments, fetching twice the returns they'd get from a bank.

Private lenders are defined as any cash source besides a regulated bank, like REITs or private equity groups, National Real Estate Investor reports. 

Borrowers turn to them often when their projects are too risky for banks—especially when lending restrictions hold banks back. Private lenders don't have to follow those same rules.

President of private lender Eagle Finance Group Brian Good says even when banks have so much money and they say they’re lending more, they actually aren’t.

Brian says banks are just sticking with their preferred clients, and that’s where his company comes in. Eagle Finance will double its business in 2015, lending $100M, he says. [NREI]