Investing in direct lending

Where yields on real estate and bonds remain stuck at 3% - 5% per year, the average net return on investing in Direct Lending - on loans issued in this calendar year - has risen to above 6.25% per year at maturities between 3 and 5 years.

Evaporating leverage on real estate

It is a relatively unknown asset class that asset managers still have limited use of in their portfolios, even though it offers good returns relative to other investments with similar low risk.
We find that real estate investors at this time are seeing their leverage on real estate evaporate on new investments due to higher interest rates. There is a sense of cyclical pressure in stock markets that also creates uncertainty. Savings accounts and bonds are obviously doing much better than before due to increased interest rates, but do not know the returns of investing in business loans. It also provides stable monthly returns secured by a^1st mortgage on real estate.

Investing in Direct Lending? Some examples:

Leased property office/business space, € 850,000, =, 5 year term, 70% Loan To Value.
Does not fit a bank because of the renovations that still need to take place before the last part can be rented out.
Healthy borrowers who are perfectly capable of absorbing a setback elsewhere in their portfolio.
Own use B&B Farm, € 750,000, =, 3 year term, 53% Loan to Value.
Owner is going to use the funds as equity in another business. Neat case with low LTV.
Leased stores (5 units), € 260,000, =, 5-year term, 27% Loan to Value.
Homeowners will use the funds to help their grandchildren buy their own homes. Very low LTV and cash flow fine.

And why aren’t the banking institutions funding this? After all, it is about 1% to 1.5% cheaper for the borrower, right? A bank’s sector policy, a different structure of the client and the type of property are important reasons for banks not to want to grant the loan.

Interesting to you? From € 100,000,= we can make you a concrete offer!

And if you just want an explanation about investing in business loans? Fine! We understand that, too. We are 100% transparent about all the things we do as subject matter experts. With an e-mail to m.vankollenburg@wdl.nl, you can get a 1-on-1 explanation of investing in business loans via a 45-minute video call appointment.

More examples of realized investments? Check them out here.

Want to know more about investing in Direct Lending? Visit the webpage.