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The Market is Changing, and We Are Prepared. By Romney Navarro

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Entering the New Year many economists believe that the real estate sector will have to do a lot of the heavy lifting to boost the US economy. Though most local, regional and national real estate markets have returned to health since the housing bubble, the real estate industry has not been the main driver in the US’s economic recovery that began in mid-2009 – we can thank consumer spending for that. For the real estate market, this is good news because historically the country has relied heavily on its performance to pave the way for the economy.

A few things are expected to ignite the growth in the real estate sector, such as the construction of more new homes, the steady stream of foreign investors and of course the emergence millennials (the largest single generation currently in the housing market). As important those factors may be, however, no factor may impact the industry as much as credit or “more” credit to be specific. To awaken the real estate giant, mortgage credit guidelines, which have remained tight since the recession, will have to be more widely available to consumers. With more consumers come more sales and with more sales comes an improved economy – or so the story goes.

While more available (and responsible) credit on a national level is somewhat overdue, looser mortgage credit is in large part what sent this country into its last financial crisis. Because Noble Capital’s focus remains steadfast on continuing performing to the interests of its investors, this year the company will introduce a longer term and higher credit program to its product mix to get ahead of any potential softening that comes from looser consumer credit standards. When many investment firms target the robust harvest of opportunities that we expect will surface this year (opportunities that we too will consider and look to capitalize on), Noble Capital will begin building a stronger overall portfolio by slowly introducing credit as a major influencer in its decision-making process. This program will be made available to investors in the PLN to supplement the already strong performance of the current investments that they have made through the company. The transition will not occur overnight as the portfolio today is bigger, stronger and better than ever but we do expect to see the shift taking place gradually over the course of the year. These new investments, which will be priced lower to both the Borrowers and Investors, will slowly serve as the cornerstone of a healthy investment portfolio of credit grade loans in the years to come when (not if) the next market downturn strikes again.

The move to achieve a stronger overall credit profile comes at a timely point in the private lending industry as the market is now also calling for compressed pricing to the end consumers (home flippers, speculative home builders, etc.). 15 years ago when Noble Capital wrote its first loans, the marketplace was young and fragmented, so pricing was not a critical driver in consumer decisions. Today, however, the emergence of the real estate investment industry has saturated the space with many firms looking to acquire market share in a variety of different ways – most easily through pricing. This demand for lower pricing is a sign that the market is changing. This new marketplace is more competitive than ever before, and the voice of those entrepreneurs whose business is to buy and sell real estate are finally being heard. To reward those worthy of eased pricing, Noble Capital will introduce its Credit Fund (PLN Fund, LLC) in January 2017 to supply the demand of the clients and prospects in the highest credit tiers that would otherwise take their business elsewhere.

At Noble Capital, we believe that this potential loosening of credit standards will result in more great short term opportunities for those clients who turn to Noble Capital’s loan originations company, Streamline Funding, for financing their real estate investment projects. A spike in demand for the funding of these projects should be expected with such an increase in their buyer pool (the consumer section of the market that the homes our clients rebuild are ultimately sold to). This opportunity in a welcomed one for the company and our Private Lender Network (PLN) clients as well seeing how demand for such financing saw some unforeseen volatility in 2016.

The market is changing and, in many ways, has changed but we welcome these changes and feel that getting ahead of them will be instrumental for the company and the health of its individual investor’s portfolios. Decisions like this forge our destiny, a destiny that is directly tied to yours. In 2017 only the utmost stewardship of your capital is acceptable as together we strive to achieve even greater success.

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