Throughout this great country of ours there is a growing demand in the area of real estate trust deeds investing. This demand, by borrowers and investors alike, can be quickly traced to direct and indirect influences at our national banks.
Unless you’ve been hiding in a cave the past few years (and who could blame you), you’re aware that the recent trends on banks’ balance sheets reflect delinquencies. How much accountability should be placed with our financial institutions for the state of our economy is up for debate and the jury repeatedly returns to the courtroom with a different verdict. Regardless, our economy continues to heal and strengthen; however, there are natural consequences of such practices.
One of those is that banks have tightened their lending standards and are hesitant to lend to anyone with less than flawless credit. It is precisely the banks’ reluctance to participate in this market that has created the attractive investment opportunity in short term real estate loans. The fact that banks are not lending to this market has created a supply/demand imbalance that doesn’t have anything to do with the quality of the borrowers, but instead with the condition of banks’ balance sheets.