These are short-term, asset-based loans provided by private lenders in a specific geographic location. They are typically secured by real estate and used for quick financing needs, often for investment properties, renovations, or purchases that traditional lenders might not approve due to time constraints or risk factors. A property investor in the specified California city might use this type of funding to quickly acquire a distressed property, renovate it, and then sell it for a profit.
This financing option offers speed and flexibility compared to conventional mortgages. Borrowers may benefit from faster approval processes and more lenient qualification requirements. The historical context reveals a rise in popularity concurrent with increased real estate investment activity and a need for alternatives to conventional lending, especially in markets with rapidly appreciating property values. The prevalence of this option allows investors to seize opportunities that would otherwise be missed.