3 Reasons Syndicators Should Embrace Mandatory Lender Reserves

Have you ever run out of gas? I’m not talking the figurative gas tank, but the literal one we have in our vehicles. (Tesla owners sub gas for electricity…)

I had a truck years ago that frequently over-stated the amount left in the tank and one time it got the better of me. Embarrassingly enough I ran out of gas. Such a pain to pull off to the side of the road, walk to the nearest gas station, spend a […]

non-recourse multifamily loans

The Difference Between Recourse and Non-Recourse Loans

I don’t have the exact quote, but the star quarterback turned real estate mogul Roger Staubach was asked about his biggest regret in building his real estate portfolio. His response was he wouldn’t have used debt with an unlimited personal guaranty attached to it. He felt that over years of experience a non-recourse approach was preferred.

That said, the point of this article isn’t to judge the merits or pitfalls of either recourse or non-recourse loans, but to provide context […]

multifamily reserves

To Reserve or Not to Reserve, That is the Question

With the rise of the COVID-19 pandemic, operating and capital reserves have become a topic of discussion for apartment syndication sponsors and investors alike.

For some, today’s uncertainty is a chance to brag about their foresight in raising a large war chest for tough times, while others fear they will soon pay the price for their lean reserves.

We have certainly seen a change in reserve requirements for multifamily loans, but more on that later.

You may wonder why sponsors don’t simply […]

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Will the Coronavirus Create More Renters?

This pandemic-caused global downturn we’re currently slogging our way through is the latest economic scar on the psyche of the Millennial generation that may convince them to remain renters long after COVID-19 is a chapter in the history books.

As masks have become the new norm as we venture out of our homes in the pandemic, will renting remain the old norm for Millennials? Most in this age group were still children in the dot-com crash at the turn of the […]

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COVID-19 – A Blessing in Disguise?

As soon I typed that title, I immediately felt internal resistance. Is that just insensitive? Is it too soon to even be having that sort of conversation???

It may be. Our nation, our world, our economy is in some real turmoil right now. And the last thing I want to do is pour fuel on the fire of pessimism, but the way I interpret the information I have consumed is simply that it is going to worse before it gets […]

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Timing the Market – 3 Step Process to Win the Refi Game

Fear and greed are the two main drivers that commonly derail day traders in the stock, futures, and Forex markets. Given the wild swings in the stock market due to COVID-19, it is hard not to be intrigued with the quick gains the stock market could provide if only you pick the right side of a trade. 20% in a day seems way better than 20% in a year that real estate can offer.
Having played that game quite unsuccessfully […]

Interest Rates in Uncertain Times

What Toilet Paper Shortages Teach Us About Interest Rates

I hate jumping on the Coronavirus bandwagon of content, but like it or not, it is having a real effect on our global economy and is causing a lot of uncertainty in the financial markets. This uncertainty is impacting the interest rates available on commercial real estate debt.

It’s really hard to say, nor is the point here to talk about what the Coronavirus situation really means to our economy long term. It is too early to really know.

What we […]

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HUD Eliminates Three-Year Rule on 223(f) Applications

Exciting news for value-add and new construction investors! On March 2, 2020, HUD announced the elimination of the three-year lock-out rule for applications to refinance or acquire existing properties under the Section 223(f) loan program.

This exciting change will open up opportunities for borrowers to refinance stabilized multifamily properties much sooner after construction completion and lease-up than previously available.

This primarily benefits those whose business model is to maximize leverage. Virtually all other loan programs – banks, Fannie Mae, Freddie Mac, […]

PFS & SREO

Want a Good Personal Financial Statement?

We all know the saying – “You never get a second chance to make a great first impression.”

The purpose of this article is to help you make your first impression with your mortgage broker or loan officer a great one.

And how do you do that?? You have a current and complete Personal Financial Statement filled out and ready to share.

The starting point for all commercial real estate loans is the Personal Financial Statement (PFS) with a Schedule of Real […]

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Commercial Loan Prepayment Penalties Unwrapped

Nothing says romance quite like a prenuptial agreement does it?

That comment is certainly facetious, but sets the stage for an analogy regarding the prepayment penalty aspect of commercial loans. It is important to understand what you’re getting into with your loan. The loan documents explain all the terms of the loan, and the prepay piece is really the predetermined cost of breaking up with a lender.

A prenuptial agreement defines and outlines what things will look like in the event […]