--- title: Institutional Capital in Private Lending | We Lend description: We recently held a webinar to dig into what’s behind the new momentum in the private lending market. Check out our overview here. image: https://www.welendllc.com/hubfs/Imported_Blog_Media/brandon-griggs-wR11KBaB86U-unsplash.jpg --- [mailto:?subject=Check%20out%20https://www.welendllc.com/blog/billions-institutional-capital-supporting-private-lending](mailto:?subject=Check%20out%20https://www.welendllc.com/blog/billions-institutional-capital-supporting-private-lending) July 21, 2021 # Billions in Institutional Capital Supporting the Private Lending Space Written by: [admin](https://www.welendllc.com/blog/author/admin) Investment uncertainty caused by the COVID-19 pandemic undoubtedly spilled over into the capital markets. As a result, many large banks set tighter real estate lending guidelines, which opened up an opportunity for private lenders to step in and offer the financing borrowers are looking for.  Here at [We Lend LLC](https://welendllc.com/), we recently held a [webinar](https://www.youtube.com/watch?v=G1lPYrNC8fk) to dig into what’s behind this momentum in the private lending market. We were joined by a panel of experts, including: - [John Beacham](https://www.toorakcapital.com/team-page/), Chief Executive Officer and Founder of Toorak Capital Partners - [Kevin S. Kim Esq.](https://geracilawfirm.com/staff/kevin-s-kim-esq/) Partner at Geraci LLP - [Jonathan Hornik Esq](https://www.privatelenderlaw.com/team/jonathan-hornik/). Partner at Private Lender Law They shared their insight on the current state of the housing market, private lending trends, and their predictions for the future of the housing market and private lending industry.     NEED ADVICE? SPEAK WITH A SEASONED LOAN OFFICER TODAY [![GET PRE-APPROVED](https://no-cache.hubspot.com/cta/default/7968327/33bb0e67-f45c-486f-abbc-caa2055515fd.png)](https://cta-redirect.hubspot.com/cta/redirect/7968327/33bb0e67-f45c-486f-abbc-caa2055515fd)   ## Economy and Housing Market Context When Covid first hit, people were scared to transact. Many buyers and sellers were taking a wait-and-see approach.  After a few months, however, activity gradually resumed. After spending extended periods of time at home, people began to rethink what they wanted from their living space. The demand for more space in the home, now a space of both work and pleasure, provoked a flurry of emotionally-driven relocations out of cities to suburban and rural areas. All of this was enabled by the shift to remote working.  Nevertheless, the housing inventory available today is in fact at an all-time low. The U.S. housing inventory has now [dropped a whopping 28.2%](https://www.nytimes.com/live/2021/04/23/business/stock-market-today) compared to this time last year, according to the New York Times.  The lack of inventory combined with increased demand has spurred an increase in the cost of residential real estate in many markets.  ## Current Private Lending Trends As we mentioned before, private lenders are benefiting from banks that set tighter lending standards for real estate borrowers. In turn, institutional capital is continuously entering the private lending space. While private lending used to be mainly funded by main street investors or family offices, institutional funds are now consistently [acquiring private lenders](https://www.businesstoday.in/money/mutual-fund/mutual-funds-on-buying-spree-for-2nd-straight-month-invest-rs-5526-cr-in-stocks-in-april/story/438625.html) and [making limited partnership investments into private lenders](https://www.marketwatch.com/story/kkr-doubles-down-on-house-flippers-with-additional-250-million-stake-in-toorak-capital-2019-06-12). This has prompted tremendous interest in the private lending space, which is expected to grow in the coming years. However, as Jonathan Hornik points out, some known aggregators coming into the space don’t know it very well, which means finding the right trading partners is key.  According to Kevin S. Kim, this level of consolidation is due to the fact that the industry is now easier to understand, when it used to be particularly difficult. There is a newfound level of sophistication and grasp of how the asset class has changed among institutional investors, he said. Now, Kevin explains, the yield is a lot healthier because larger capital sources have come in, lowering the cost of capital. As a result, folks who are late to the game are having trouble jumping in.  ## What Lending Products are Hot Now and Why? According to John Beacham, debt service coverage ratio (DSCR) loans, which are permanent loans for rental properties, are particularly popular at the moment in the private lending industry.  This is because, unlike Government Sponsored Enterprise (GSE) loans, they are issued based on the cash flow of the investment, rather than the borrower’s personal income. Lenders can therefore underwrite a property based on its rental income instead of using the borrower’s income. Small multifamily bridge loans are also gaining traction at the moment, Beacham added. ## What Will Happen to the Housing Market Going Forward? As the U.S. comes out of the Pandemic and [half of the country’s adults are now fully vaccinated](https://www.nbcnews.com/news/us-news/half-us-adults-fully-vaccinated-n1268424), eviction and foreclosure moratoriums will begin to draw to an end.  As a result, we predict that more distressed properties will inevitably become available on the market. Here at WeLend, we foresee that there will be a flurry of activity in the foreclosure and short sale markets later this year, which will cause an uptick in opportunists for investors to find good deals on [fix and flips](https://www.welendllc.com/blog/fix-and-flip-checklist-for-first-timers). ***Learn more by watching our webinar below:*** ## What’s Next for Private Lending? If we had to sum up the future of the private lending industry in three words, they would be construction, construction, construction.  Despite the current surge in prices of construction materials, the reality is that the U.S. is facing a [severe housing shortage](https://www.wsj.com/articles/u-s-housing-market-is-nearly-4-million-homes-short-of-buyer-demand-11618484400).    WE LEND OFFERS A RANGE OF PROGRAMS TO SUIT EVERY TYPE OF RESIDENTIAL REAL ESTATE INVESTOR. [![learn more](https://no-cache.hubspot.com/cta/default/7968327/c6db9ad1-778d-451c-a428-038453fe68d6.png)](https://cta-redirect.hubspot.com/cta/redirect/7968327/c6db9ad1-778d-451c-a428-038453fe68d6)   According to the mortgage-finance company Freddie Mac, the U.S. housing market is currently [3.8 million single-family homes short](http://www.freddiemac.com/research/insight/20210507_housing_supply.page?) of meeting demands.  Therefore, in the short term, real estate construction is a necessity. With many banks not lending on construction, Kim predicts that many borrowers will be incentivized to borrow from private lenders to fund their construction projects instead. In his opinion, private lenders must step up to meet this new demand for ground-up construction. Tag(s): [Uncategorized](https://www.welendllc.com/blog/tag/uncategorized) ## [admin](https://www.welendllc.com/blog/author/admin) ## Other posts you might be interested in View All Posts [ Uncategorized ## How to Use Private Money to Buy Foreclosures at Auction As any experienced fix and flipper will tell you, foreclosure properties can often be picked up at a low price and flipped for a high profit. Read More ](https://www.welendllc.com/blog/private-money-loan-foreclosure-process-buying-at-auction) [ ## Buying Foreclosures in Georgia in 2022 [Expert Guide] Georgia is certainly an attractive market for real estate investors in 2022. Home to major metro areas such as Atlanta and Columbus, it’s been one of the fastest growing... Read More ](https://www.welendllc.com/blog/buying-a-foreclosure-in-georgia) [ Uncategorized ## What Are The Requirements For a Construction Loan? [By An Expert Lender] If you’re thinking of taking on extensive construction or renovation on a property you own or are considering building a home from the ground up, then a construction loan... Read More ](https://www.welendllc.com/blog/construction-loan-requirements-guide) ## Subscribe to email updates ```json { "@context" : "https://schema.org", "@type" : "BlogPosting", "author" : { "@type" : "Person", "name" : "admin", "url" : "https://www.welendllc.com/blog/author/admin" }, "dateModified" : "2026-07-01T18:19:05.495Z", "datePublished" : "2021-07-21T00:00:07.000Z", "headline" : "Institutional Capital in Private Lending | We Lend", "image" : [ "https://www.welendllc.com/hubfs/Imported_Blog_Media/brandon-griggs-wR11KBaB86U-unsplash.jpg" ], "mainEntityOfPage" : { "@id" : "https://www.welendllc.com/blog/billions-institutional-capital-supporting-private-lending", "@type" : "WebPage" }, "publisher" : { "@type" : "Organization", "logo" : { "@type" : "ImageObject", "url" : "https://www.welendllc.com/hubfs/Logos/weLend_nationwide-private-lending.png" }, "name" : "We Lend" } } ```