Could Private Lending Help Solve Housing Shortages?

HM Capital
2 min readMar 23, 2021

Urban areas all across the coastal US are experiencing a severe housing shortage that drives prices up. In California, the housing shortage is so severe, current housing production will have to triple in order to just keep up with demand.

Many policy makers have struggled with possible solutions to this issue. Housing advocates who focus on affordable homes seek government intervention by regulating finance access and rent restrictions.

Developers on the other hand, argue that the lack of density in urban areas is due to outdated zoning laws.

Diversification is the Key to Create more Housing Units, Fast

Private lending for real estate can offer creative solutions for constructing housing units — and fast. Traditional financing with large institutions will always fail to consider the opportunity behind creative housing solutions that don’t fit the regular mold.

Innovation in housing construction has taken a leap in recent years. Companies have found ways to build homes in much less time, for way less money. It is unlikely that banks will provide financing for a new project with, say, ‘tiny homes’.

Tiny Houses

Tiny homes are small, efficient size houses that are pre-manufactured in a factory. They range from 50–400 square feet total, and employ several efficient storage techniques in order to maximize utility.

Average cost — $60,000

Length to build — 1 week

Manufactured Homes and RVs

Mobile homes are as American as baseball. It is an excellent choice for those on fixed income and retirees who want to own their own homes for a low entry point.

The negative stereotypes, if there are any left, disappear with modern design and wood construction — that replaces aluminum walls (that also had serious insulation problems).

Traditional lenders AND private lenders tend to shy away from manufactured homes — which will hopefully change in the future.

Manufactured Homes + Private Lending

With the help of hard money lenders, creative real estate investors could erect cities in a matter of months, not years. Manufactured homes cost up to 90% less — and more importantly they are made much faster than traditional slab.

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