Over the past few years, U.S. financial institutions have increased their investment in the Hard Money space. Beginning with an investment from Goldman Sachs in 2017 to acquire Genesis Capital, a large lender for fix & flip loans, Wall Street and venture capital firms have teamed up to provide capital for Lending Home and Peer Street, the largest hard money loan dealers in the country. Most recently, publicly traded company KKR received an investment of $250M by Toorak to support their roughly $1.5B fix & flip loan fund; with this new injection of capital, they’ll be able to provide even more. 

Investments on this scale demonstrate Wall Street’s support of the private lending business, and therefore its security. With interest rates at record lows and housing constantly on the rise, private lending has become a safer, more institutionalized investment than ever before. John Beacham, Toorak’s Chief Executive, stated in an article from the WSJ that he believes credit rating agencies will begin to rate bridge loan bonds, opening up the floodgates to institutional investors. Allowing wealth managers to invest in the private lending sector in the same fashion as they would invest in a stock or bond will dramatically increase the flow of capital in the industry. 

With this large increase in deal flow within private, asset-based lending practices, Scout has created a marketplace to encourage lenders to compete for business — driving rates downward as demand increases. In turn, more individuals will be incentivized to pursue the more appealing rates of hard money when applicable, furthering the growth of the sector.