05 Oct Investing in Private Commercial Loans
As a remedy to try and curb inflation, The Federal Reserve has undertaken an aggressive approach of drastically increasing interest rates since the beginning of 2022. The Fed Funds Rate has increased from slightly above zero percent in March 2022 to its current rate of 3.25% and The Fed has telegraphed to the investment community that it plans on continuing to increase the Feds Fund Rate to approximately 4.25% by year end 2022.
The aforementioned approach by The Fed has yet to curb inflation. In fact, one could argue that inflation continues to wreak havoc with both consumer prices and business expenses alike. In addition, the drastic increase in interest rates has caused the stock market to “tank” as evidenced by a 2000 point decrease in the DJIA as of the end of the third quarter (9/30/22).
The majority of accredited investors in the U.S. have a substantial portion of their net worths invested in equities and have seen their portfolios underperform the markets during 2022. Despite the current weak economy and “suspect” stock market, the Fed’s draconian initiative to drastically increase interest rates has presented a “silver lining” opportunity for accredited investors. Commercial loan’s interest rates have risen exponentially during 2022 thus making it more attractive for an accredited investor to invest in short term private commercial loans. These instruments provide the investor with solid double digit returns, liquidity, diversification and security as these assets are secured by either first or second mortgages on real property with underlying loan to values (LTV’s) of 50% to 60%. Private short term commercial loans should be part of an individual investor’s overall “pie chart” as a desired asset class to be included with one’s other assets including stocks, bonds and cash.
Worth Avenue Capital specializes in arranging debt financing for both small businesses and real estate developers/investors and also handles bank workouts for those same clients. You can learn more about WAC by taking a look at the website and Youtube videos or by contacting WAC’s principal, Michael M. Ciaburri at worthavenuecapital@gmail.com or (203) 605-4082. WAC maintains offices in both Guilford and Greenwich, Connecticut as well as Palm Beach, Florida. Be sure to follow @worthavecapital on Twitter for the latest lending news.