Arbitrage Opportunities in Multifamily

Is There Arbitrage Opportunity in Multifamily Today?

Arbitrage is such a great word. It implies some sort of mystery, intrigue, intelligence, and opportunity. All things that are attractive to us as humans and certainly the opportunity piece as multifamily investors.

The word emerged through the course of a conversation I had with a friend and real estate broker this week as we discussed market conditions and interest rates. There is a subtle arbitrage opportunity in today’s multifamily marketplace given where interest rates have fallen to and cap […]

Multifamily Compass

Multifamily Market Mid-Year 2020

As we round first base in the 3rd quarter of 2020, from my perspective we’re settling into a new-normal. A normal that is full of question marks and ambiguity. Not an easy place to be as an investor, but the appetite for multifamily remains quite strong.

The first half of 2020 is essentially the tale of two economies: the pre-pandemic economy and the economy of the pandemic’s first three months. The very nature of what this crisis has caused will […]

Empathy

Will Empathy Make Us Better Investors?

Does anyone else feel like we’re about 17 months into 2020 even though we’re only at the mid-July point???

The events of the last couple of months have been heavy, this year has been heavy, and I for one am feeling the weight. No need to rehash why, I know we’re all aware.

I started listening to an audiobook titled Principles by Ray Dalio a couple weeks ago. Admittedly it isn’t the lightest of reads either, but it’s been brilliant. I […]

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 […]

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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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 […]

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More Than Double Your Returns with This Strategy – Bridge Loan vs. Perm Loan Case Study

Everyone wants the best rate and terms when financing a multifamily deal. It goes without saying. We naturally seek quotes and rate sheets with the lowest possible published rates.

Rate is the simplest “common” denominator used to compare different loan options. It is easy to understand, but not always the best gauge of overall returns. There are several other variables to consider.

We want that low rate, but we also want leverage. Leverage is how we juice our returns. It’s not […]

Runway

Runway is Clear for Agency Financing in 2020

We are now a month into 2020 and wanted to share a few exciting updates about Agency (Fannie Mae and Freddie Mac) loans for this year. In a nutshell, Agency loans provide a great non-recourse alternative to recourse bank loans with additional bells and whistles like 30-year amortizations, interest only periods and low interest rates, all of which combine to increase your net cash flow.

Both Fannie Mae and Freddie Mac announced their year-end 2019 production volumes last week. As […]

multifamily construction loans
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Weighing Your Loan Options for New Construction Financing

Building the Right Financing Package for New Construction Loans

New construction spending is reaching all-time highs—what an exciting time to be a part of the ever-evolving real estate market. Forging ahead in both the established and emerging development markets are new mixed-use properties and multifamily builds.

As lending specialists, we’ve seen developers and investors use a myriad of tools to get their projects built. Just to name a few, funding sources can come from:

An individual’s own cash and capital
An […]