I get mixed answers from all over when talking to lenders and would love to know from a larger pool of people. What makes the ideal time frame for you? If you want longer projects why not join as an LP in some commercial deals? Do you see more risk there especially with where rates have gone? I’m all about thought provoking discussion!
Hey Beau! I am interested in short term 1 year or shorter right now. I can see myself in the future going for longer term deals.
Hi Beau. I like short team (1 to 2 years). I would consider a longer term with an investor I’ve worked with in the past as well.
I prefer one year or less at this point.
We are looking for 1 year or less for now.
While a loan tenor of <= 1 year seems prudent in what will likely be a forthcoming environment of contracting credit which may limit borrowers’ ability to refinance out, there is also reinvestment risk for lenders. Ideally, borrowers with sufficient deal flow such that a current lender may be able to roll their investment with a borrower into a new transaction without much down time, is appealing. For example, in a 12 month deal, around month 9-10 having a borrower present the lender with 2 or 3 opportunities that will be available at the time the current lending transaction will mature, would be useful for both borrower and lender. It’s also useful for a borrower to have varied opportunities between very short term and longer term, such that maturities on loans can be staggered and a lender has some choice (e.g. 1st vs. 2nd lien).
Developing a borrower-lender relationship is key.
I love 6 month or Less deals right now
Would be interested to hear why – do you feel there will be even greater opportunity in 6 months, or are you concerned about tighter underwriting in coming months constraining borrowers’ ability to refinance a lender out? Maybe both? Assuming if you say 6 months you feel confident your funds will find a new home, thus not purely a defensive strategy.