Some banks in the Los Angeles area and other parts of the United States currently have concerns about the state of the economy, and for this reason, they are not eager to lend money to investors. This has created new opportunities for alternative lenders to step in and meet the needs of investors who need capital to purchase properties featuring commercial leases. In fact, these lenders have already raised significant amounts of capital for secondary real estate financing.
Banks remain wary of financing non-residential real estate, even though more than 10 years have passed since the Great Recession of 2008. These institutions are especially cautious about financing new construction. This has caused more developers to become lenders themselves, essentially acting as shadow banks.