Financial strife is always stressful. No matter how much you prepare and plan unexpected events will always lead to unexpected results. You can’t plan for every contingency… or more to the point every market change.

I am going to talk about investors in two general categories. The first is real estate investors. No, not the speculators who are trying to wholesale or flip or any other short term type gambit. I am talking about real estate investors. The ones who have a long term approach. They look for value when they purchase. They know their real asset is the people who pay the rent, not the physical building itself. Long term money to support these types of investments is getting tighter. The underwriting requirements are increasing and the small investor is going to have an increasingly difficult time in securing this type of financing on very favorable terms.

The speculators however are in for an increasingly rude surprise. Many operate with hefty lines of credit they use routinely to keep the process flowing for them. Those lines are credit are in jeopardy. Many are already under review and many more have already been reduced or canceled out right. These speculators still represent the most risky segment of the real estate market and as more and more scrutiny is focused on the lending community their risk tolerance is shrinking fast. As a result, short term money is disappearing.

For the real estate investor who has varied funding sources, and those sources are stable, they are going to continue to find great deals to add to their long term holdings or turn for a modest profit.

We are moving back to a time when businesses did not rely on the local banker for the money to do business.

For real estate investors and speculators, private money is no longer an alternative to “traditional” funding sources. For the real estate investors who not just survive, but thrive over the next four to five years, private money will be central to their strategy.

We are at an interesting convergence of events that not only make private money a necessity but is actually increasing the potential pool of private money.