As of this writing, private lenders invested $266 billion in the country’s real estate market in 2018. While it might appear that much of this figure is due to attempts to make purchases in areas that are highly coveted, the reality is more likely that this funding has simply been targeted toward those deals that will generate the expected returns.
Private lenders currently seem to be in one of two camps — a trend that’s projected to continue into 2019. While some private lenders might think twice before funding a project that’s faced with elevated prices, others will look past that surface number and into their future rewards. As a group, private lenders agree that the returns seen in real estate will continue to rise above other economic growth for the foreseeable future.
Hospitality, commercial and industrial properties are expected to continue to be solid investment choices next year. Competition among private lenders is likely to heat up in 2019 which could lead to fewer lending standards. This could be what those investors who are not averse to risk need to accomplish their funding goals. Of course, this also implies that the risk to the industry could increase as well.
In spite of its volatility, real estate continues to be a good bet when it comes to growth potential. This is true whether an investor is using real estate as a hedge or a long-term capital investment. For 2019, investors should seek projects that show growth potential without being caught up in inflated prices.