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Why Downtown Los Angeles Is the Place for Alternative Commercial Money Lenders to Focus on in 2016

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All reports show that baby boomers are our up-and-coming home buyers. Baby boomer professionals with money are looking to settle down and buy parcels of land that they can call their own and, if they have children, pass on to coming generations. Baby boomers mostly live, work and play in downtown Los Angeles and that is why this article suggests that alternative commercial hard money lenders may want to consider focusing their business on that area.

Downtown Los Angeles

Downtown Los Angeles is the central business district of Los Angeles, as well as a diverse residential neighborhood of some 50,000 people at this time of writing. A 2013 study found that the district is home to over 500,000 jobs. Wikipedia mentions that the district declined economically and suffered a downturn for decades until the early 2000s. Now, construction is brisk. Old buildings are being modified for new uses, and skyscrapers have been built. Downtown Los Angeles is known for its government buildings, parks, theaters and other public places.

Downtown Los Angeles is flanked by Echo Park to the north and northwest, Chinatown to the northeast, Boyle Heights to the east, Vernon to the south, Historic South Central and University Park to the southwest and Pico-Union and Westlake to the west. It is bounded on the northeast by Cesar Chavez Avenue, on the east by the Los Angeles River, on the south by the Los Angeles city line with Vernon, on the southwest by East Washington Boulevard and on the west by the 110 Freeway or Beaudry Avenue, including the entire Four Level Interchange with Highway 101.

In 2013, a study by Downtown Center Business Improvement District (DCBID) showed that of the 52,400 people resided in Downtown Los Angeles, the demographic breakdown was 52.7% Caucasian, 20.1% Asian, 17.0% Latino, and 6.2% African-American; 52.9% female, 47.1% male; and 74.8% of residents were between the ages of 23-44.The median age for residents was 3. The median household income was $98,700. The median household size was 1.8. In terms of educational attainment, 80.1% of residents had completed at least 4 years of college. The study was a self-selecting sample of 8,841 respondents across the Downtown LA area. It was not a “census” but rather a comprehensive survey of Downtown LA consumers.

Downtown Los Angeles and baby boomers

Downtown Los Angeles seems to be the territory of baby boomers. Research shows that baby boomers gravitate towards work/live/ play environments and LA certainly has all of that. According to a map from JLL that tracks millennials and baby boomers, Downtown Los Angeles outnumbers baby boomers by 10% in a consumer market. In most of the industry markets in Los Angeles, the breakdown is 25% millennials to 21% baby boomers.

Taylor Coyne, researcher of JLL, says that this information indicates where we need to build housing:

 

There is a huge demand for affordable housing in L.A. and understanding where one of the largest population groups wants to live, what amenities are most important to them, and what neighborhoods they can currently afford, could help guide development.

 

Baby boomers living in LA have upped their income during the last few years. They are focusing on their investment portfolios. A large number of baby boomers live in downtime LA. It only makes sense to construct there. It would also make sense for private money lenders to take another look at this area.

Downtown Los Angeles and private money lenders

Baby boomers, as the JLL report also shows, are the up and coming home buyers… Companies are making use of this research and setting up businesses accordingly. Money lenders may want to take this data into consideration,too.

Los Angeles is pricey. Most of its homes tossed from out of the reach of the regular man or woman of the street. Many prospective investors, too, are likely to find themselves shunned by local banks who are becoming increasingly reluctant to loan the necessary funds. Reports show that entrepreneurs and owners of startups comprise the bulk of business for hard money/bridge/ private lenders when it comes to commercial lending. A large segment of those who seek loans to start their own business, market some invention, or engage in some other entrepreneurial project are baby boomers. Many of these individuals live in LA. The population is the perfect target market of private money lenders!

More so, many of these baby boomers have the necessary resources for going into the risky deals that constitute hard loans. They are willing and primed to deal with high repayments and the possible risk of losing their property. Many borrowers tend to sandwich hard money loans with bank loans. The entrepreneurial mindset is adapt to and habituated in taking risks. Baby boomers and private money lenders seem to be a match made in heaven. Or, at least, in the sometimes heaven of downtown LA.

Finally, although not conclusively, baby boomers are known as the “fast generation”. They doped on speed when young and fizz themselves with business speed when older. Their hyped up world of fast business deals and the now and immediate syncs with the hard money lender who beats the banks by offering customized McDonalds’-fast deals. Many investors or business owners cannot afford to wait the 2-3 months process that is demanded by the banks nor do they have the time or patience to fill out the numerous forms. Commercial private investors offer an alternative. Money can switch hands in shorter than a week. Forms are few. Schedules and terms are adjusted according to your convenience. No bank provides that! There is a comfortable face-to-face setting.

In short, downtown Los Angeles is the ideal place for hard money commercial lenders to set up court since it is the residence of baby boomers. And baby boomers – well, they are the ones buying homes right now.

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