Epic Real Estate Investing - Banks dumping real estate in 2025 (only 31% left) | 1440

Episode Date: March 11, 2025

In this episode, we reveal significant shifts in the lending market and how they impact real estate investors. Traditional banks now only handle 31% of all loans, down from 44% two years ago, and the number of U.S. commercial banks has decreased drastically since 1984. Investors face challenges as traditional lenders take 30-60 days for approvals, while life insurance companies, commercial mortgage-backed securities, and agency lending are stepping in to fill the void. We share a compelling example of how these changes affected one investor, Elena. She faced significant delays and obstacles with traditional banks but turned her fortunes around using specialized lenders. Our discussion includes how these lenders differ from traditional banks and why they are better suited for today’s market needs. A Google Doc playbook is available through the link provided, offering strategies for navigating the current lending environment. Elena's playbook: https://docs.google.com/document/d/1kzB9133SCpNk9Q4oZAT6Th0lmAsdLzPLKemSomfFhKU/edit?tab=t.0#heading=h.gjxl0kndg2lx Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terio Media. Hey, strap in. It's time for the epic real estate investing show. We'll be your guides as we navigate the housing market, the landscape of creative financing strategies, and everything you need to swap that office chair for a beach chair. If you're looking for some one-on-one help, meet us at rei-aise.com. Let's go, let's go, let's go, let's go, let's go, let's go.

Let's go. While the general public has no clue, industry experts are, quietly forecasting a major lending bounce back in 2025. But here's the shocking truth. Traditional banks now handle just 31% of all loans, down from 44% just two years ago. If you're struggling to find good financing, and let's be honest, that's every investor's biggest challenge. Stay with me, because what I'm about to share could completely change how you fund your next deal. Let me take you behind the scenes and show you some numbers very different than what you'll see in the mainstream media.

Look at this shocking trend. the number of U.S. commercial banks has plummeted by 70% since 1984, dropping from 14,400 to just 4,375 today. That's not just a statistic. That's fewer options for you as an investor. And here's what most people don't realize about this decline. Traditional banks are moving at a glacial pace, taking 30 to 60 days for approvals while deals are getting snatched up in hours. A massive $957 billion in commercial mortgages are maturing in 2025. alone. That's 3% more than last year, creating a perfect storm of competition for financing. Despite the Fed starting its rate cutting cycle last year, Fannie Mae still expects 30-year fixed-rate mortgages to average around 6.8% throughout 2025, higher than their earlier predictions.

Bank lending spreads remain significantly higher than pre-pandemic levels, making each deal more expensive to finance through traditional channels. So here's the problem that we're facing. traditional lenders simply aren't set up to serve real estate investors anymore. Their rigid guidelines, bureaucratic processes, and risk-averse approaches are completely misaligned with what investors need to succeed in today's market. While the overall lending market is projected to grow 16% this year, according to the Mortgage Bankers Association, the banks themselves are still struggling with internal constraints, outdated policies, and a fundamental misunderstanding of investor timelines.

You find a great deal, you run the numbers, it works perfectly, but then you slothed slam into the wall of traditional financing and watch helplessly as your opportunity slips away. Now, these numbers are just the tip of the iceberg. What I'm seeing behind the scenes is even more concerning for investors. Here, let me show you something that proves just how bad this disconnect has become. First, life insurance companies have increased their market share from 9% in 2020 to over 14% today, stepping in where banks have retreated. Two, commercial mortgage-backed security saw loan origination soar 128% U.S. 28% year over year in the fourth quarter of 2004, showing investors are desperately seeking alternatives.

Third, agency lending to multifamily real estate jumped 40% quarter over quarter in late 2004 as investors turned to any available source of capital. Four, traditional banks typically require six to 12 months of seasoning before allowing cash-out refinances, locking up your capital during the most critical growth phase. And five, over 68% of industry experts now expect improved conditions for commercial real estate in 2025, but this improvement depends entirely on finding the right capital sources. Here, let me tell you about Elena, one of my private clients. Before we met, her story was a perfect example of how devastating these banking limitations can be. She'd spent five years building her

portfolio to 12 units when she found an incredible forplex, $850,000, generating $7,200 in monthly revenue, priced $75,000 below market. The numbers were perfect. She moved fast, negotiated the price down another 25,000 and put down $35,000 in earnest money. Everything looks set for another win. Then the nightmare began. Her traditional lender, the same bank she'd used for her last six deals, started playing games, document after document, delay after delay. Every week brought new demands for paperwork she had already submitted three times. Her heart sank with every email requesting just one more thing. As 30 days turned into 45, the seller started threatening to walk. And that was a problem because Elena had built her reputation on close.

closing deals quickly. It was why brokers brought her off-market deals first. Now she wasn't just facing the loss of her $35,000 earnest money, but something far more valuable, her credibility in the market. The stress was crushing. She couldn't sleep at night, calculating the numbers over and over, $7,200 in lost monthly revenue, another investor ready to snatch the deal, and five years of relationship building with brokers at risk of crumbling. Her entire growth strategy aiming for 50 units by 2006 was stalling because of bureaucratic red tape that made absolutely no sense for an experienced investor with her track record. Elena felt completely stuck, stressed, and frustrated. The lender she had trusted for years was now threatening her entire investment future.

And coincidentally, that's when Elena and I crossed paths. And she's back to being the investor that brokers call first with their best opportunities. And you can have the same playbook that I gave her, by the way. I made it easy and uploaded it for you at the link in the description. It's just a simple Google Doc. I don't need your email. or anything like that. You can have it. Now, you might be thinking Elena's situation was unique, but look at what the data reveals about investors nationwide. The numbers explain exactly why her experience is becoming increasingly common. First, traditional banks target an average 30-to-60-day closing window, while investor deals often require 7 to 14 days to secure the best opportunities.

Second, bank approval processes involve an average of 5 to 7 different departments, creating multiple bottlenecks that delay even straightforward investor loans. And third, when property needs repairs, traditional lenders typically won't consider after repair value, forcing investors to leave equity on the table or seek expensive hard money options. And four, during the fourth quarter of 2024, multifamily lending increased by 84% year over year. But almost all of this growth came from non-bank lenders who better understood investor needs. And five, industry studies show that investors who use specialized lenders close an average of 37% more deals, annually than those relying exclusively on traditional banks. Now, after seeing these patterns emerge

over and over, I started looking deeper within my network into what successful investors my peers were doing differently. And what I discovered was fascinating. While most investors are still fighting with traditional banks, a small group of savvy investors have quietly shifted to specialized lenders who actually understand real estate from the inside out. And here's what really caught my attention. These specialized lenders aren't just financial institutions, their actual investors themselves. Instead of dealing with a loan officer who's never closed an investment deal in their life, you're working with people who understand exactly what you're trying to accomplish. And there's a bunch of them out there, but let me give you a real example. Beltway lending is one of these specialized groups that I've been watching closely. And what makes them different isn't just their investor-focused programs like no seasoning refinances. It's their fundamental understanding of what you're dealing with. You see, when you find a great deal, they get that you need to move now, not in 60 days when the opportunity is gone. If Elena had been working with a lender like Beltway from the start, she could have closed that deal on time,

maintained her reputation for reliable closings, and been planning her next buy instead of losing sleep over paperwork delays. Look, if you want a copy of the playbook of how investors like Elena are navigating this new lending landscape, I made it really easy and I uploaded it for you at the link in the description. And it's just a simple, straightforward Google Doc. And it includes, you know, when to use traditional banks versus specialized lenders,

a pre-approval checklist that actually works. real numbers on a cost of lending delays, proven tactics for keeping sellers patient, and how to position yourself as a priority borrower. Look, here's the thing. If you're just buying one property every few years, traditional banking might work fine for you. But if you're serious about building a portfolio,

you'll probably want this. I don't need your email or anything. The link is going to take you straight to the Google Doc, and it's all yours. All right? I'll see you next time. Take care. And that wraps up the epic show.

If you found this episode valuable, who else do you know that might too? There's a really good chance you know someone else who would. And when their name comes to mind, please share it with them. And ask them to click the subscribe button when they get here and I'll take great care of them. God loves you and so do I. Health, peace, blessings and success to you. I'm Matt Terrio.

Living the dream. Yeah, yeah, we got the cash flow. You didn't know home for us. We got the cash flow. This podcast is a part of the C-Sweet Radio Network. For more top business podcasts, visit c-sweetradio.com. Thank you.