Private equity giants giving bridge loans to home flippers

Small-time business is one of the last fragmented lending sectors

New York /
May.May 08, 2015 10:00 AM

Wall Street is deepening its investment in the housing sector, with an increasing number of major institutional investors now providing bridge loans to small-scale home flippers.

Colony Capital, Cerberus Capital and Blackstone Group are among the firms that have started making the loans to investors who buy homes and quickly sell them for a profit, a practice that is benefiting from rising prices, a shortage of inventory and limited new construction, according to Bloomberg News.

“It’s one of the few highly fragmented businesses left,” said Beth O’Brien, CEO of Colony’s lending business. “If someone can do it nationally at scale, it’s cheaper and better for the borrower.”

Bridge loans, which are backed by the real estate, give investors cash for home purchases and renovations with about a year to repay.

Blackstone plans to make $1 billion of these types of loans per year. [Bloomberg News] — Tess Hofmann


Related Articles

arrow_forward_ios
A photo illustration of Blackstone's Jon Gray (Getty, Blackstone)
Blackstone ramps up tenant evictions
Blackstone ramps up tenant evictions
Jonathan Gray
Real estate problems drag down Blackstone’s profits
Real estate problems drag down Blackstone’s profits
From left: Blackstone's Nadeem Meghji and Jon Gray (Getty, Blackstone)
University of California commits $500M more to BREIT
University of California commits $500M more to BREIT
Blackstone’s Nadeem Meghji
Blackstone REIT’s latest adversary: tenants
Blackstone REIT’s latest adversary: tenants
Home Partners of America co-founder Bill Young
Home Partners of America cuts workforce
Home Partners of America cuts workforce
Stuyvesant Town and Blackstone president Jonathan Gray (Getty; Blackstone/YouTube)
Here’s what Stuy Town ruling means for rent regulation
Here’s what Stuy Town ruling means for rent regulation
Blackstone's Nadeem Meghji (Blackstone, Getty)
Blackstone: UC investment “changed the narrative” around BREIT
Blackstone: UC investment “changed the narrative” around BREIT
Blackstone's Jonathan Grey and an aerial view of Stuytown (Getty, Alamy)
Stuy Town tenants score major win to keep apartments stabilized
Stuy Town tenants score major win to keep apartments stabilized
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...