CALCAP Financial, a hard money lender based in Southern California, hopes to double its loan volume in 2011.
Then again, the firm's 2010 production wasn't all that large to begin with, but it is beginning to find more institutional investors willing to listen to pitches about funding hard money loans backed by real estate.
"We did 20 loans last year with most of that coming in the second-half," said CALCAP founder and managing principal Edward Aloe. "We hope to double that easily this year."
The average loan-to-value ratio of a CALCAP loan is 50% and its borrowers pay interest rates between 9% and 14%. The FICO scores of its borrowers is north of 700. "There's still a credit crunch out there," said Aloe.
The company uses private investors (mostly wealthy individuals) to fund its production. The loans turn over every three to six months. Often, the borrowers are buying homes to fix them up for resale and cannot easily obtain credit from banks.
Last year institutional investors wanted at least a 20% return on their money, but according to Aloe, their demands are starting to come down. "They wanted 20% but now they're willing to take 10%. You might say 10% is the new 20%."
The firm declined to identify its investors or any of the institutional firms it is talking to.
