Christian Faes, Founder of Faes & Co, joined Julie Cooling, Founder and CEO of RIA Channel, to discuss short-term lending in the residential real estate market.
Faes & Co offers a private credit fund focused on residential real estate bridging finance, a niche market that requires $45 billion in annual loans in the US. Entrepreneurs who actively buy, sell, and rehab properties need short-term financing to fund their projects. Once the home renovation project is complete, the loan is repaid, either through the sale of the home or by refinancing with a mainstream lender once the house has been leased.
With loans outstanding for less than one year on average, Faes & Co offers its fund to accredited investors with a one-year minimum holding period and quarterly liquidity thereafter. Faes describes the fund as an alternative to a term deposit, offering a stable yield of 9.5%.
While US home prices continue to increase, volumes have declined substantially, as investors with low mortgage rates are reluctant to move and buy a new home at today’s much higher rates. Faes looks forward to how lower mortgage rates might revive sales in the housing market.
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