Recent Changes in Commercial Real Estate Financing

August 28, 2008 · Posted in Comercial Real Estate Financing, Recent Changes · Comments Off 

It has been said by many leading experts that more changes have occurred in commercial real estate financing in the last 5 years than the previous 50 years. Nowhere have these changes been more evident than in the “Small Balance” arena (Loans between $100k – $5 Mil).

Loan programs such as “stated income” (meaning no business/personal tax returns or personal financial statement required), 30 year fixed and 90% non SBA financing have popped up and are turning heads – both traditional bankers and borrowers that are enjoying additional loan options never before seen.

How and Why? Secondary market… While the residential side of the business embraced forming a secondary market in the 80’s leading to great efficiency’s and standardizations within the industry the commercial side floundered and continued to portfolio loans (meaning basically that the banks lent their own money and held onto the loan for the long term).

Essentially the secondary market creates more diversification and thus less risk for the investors (like pension funds) that hold onto the debt long term. Rather than having a individual loans in a specific geographic area the investors basically pools together 100’s of individual loans (pools are often in the $100 of millions) all across the country and spread out with different building types, i.e. retail, office, multifamily etc. creating even more diversification. Read more

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What Are the Best Markets to Invest in Foreclosures?

August 6, 2008 · Posted in Foreclosure, Real Estate · Comments Off 

Nothing is sweeter than finding the perfect foreclose property in the perfect area at the perfect price. Just one such property can easily earn you a years worth of investment income. Trouble is most foreclosure investors rarely ever find their ‘dream’ foreclosure. In fact, the average foreclosure investor will struggle to find a single, decent foreclosed property. It’s not because there aren’t foreclosed properties to go round, but rather because of the sheer number of people looking to invest in foreclosed properties. To make matters worse, investors have penetrated every phase of the foreclosure process.

This means that many savvy investors try to get a steal on a house before the house is made available to the general public. Foreclosed homes are available in almost all areas of the country but investors have a tendency to only look for properties within their general area. Some foreclosure investors have simply forgotten that a profit made anywhere is still a profit. If you’re having trouble locating the perfect foreclosure, it could be because you simply live in an area that isn’t very well suited to foreclosures.

The first market you should consider outside of your own should be the next closest metropolitan area near your home. I happen to be fortunate and live only an hour away from three major metropolitan areas. Each metropolitan area near me has different demographics and different market trends. Before looking into any other area, you should always be sure to have an exit strategy in mind. When it comes to foreclosed homes, the best exit strategy is renting the property. In order to do this you need to evaluate the rental market of your chosen market.

If you like to travel and see new places, you might consider looking for foreclosed homes in the country’s biggest foreclosure markets. Right now, Atlanta, Houston, and Denver have the hottest foreclosure markets anywhere in the United States. Read more

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