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Community Banks Filling the Void Left by Large National Banks

Over the last several years the larger banks have dominated the multifamily lending market. It seems like Chase was the first lender on the list any time a multifamily deal came into our brokerage. If not Chase, then it was a similar large bank, and the smaller local banks were typically an afterthought. COVID has changed all of that. The big banks that previously had a bit of a stranglehold on the multifamily market are now busy dealing with forbearance and other issues brought on by the pandemic and are no longer offering the most aggressive terms. Nowadays, agency loans (mortgages offered by Fannie Mae and Freddie Mac) are the hottest thing on the market. They are offering historically low rates and high LTV’s along with other attractive terms that make taking the agency route an easy decision. However, there is a void to be filled for multifamily loans that do not meet the agency criteria – and the community banks are filling that void. 9 months ago, those loans that couldn’t go the agency route but were still considered good, clean deals would be snatched up by a big bank. Now that those banks are no longer aggressive in the multifamily market, the community banks have an opportunity to step up and grab those deals. And for many borrowers, these community banks will provide some extra advantages. For one, community banks lack the strict rigidity of larger banks. They often have a little more wiggle room when making deals and will ......
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Is Buying Student Housing For Your Children a Good Investment?

Is Buying Student Housing For Your Children a Good Investment?
The number $22,958 represents the average cost of tuition and fees in 2014-15 for out-of-state students attending a public university, according to the College Board. On top of that, room and board is estimated to cost $9,804 per year, bringing the grand total to $32,762 per year to attend a public, out-of-state university. These figures explain why many students will rely on their parents for financial assistance with their academic careers.   In many instances, parents will not only help finance a student’s tuition, but also their rent. In 2012, the National Apartment Association surveyed 3,605 parents with children attending college or university and found that 56% of respondents paid for 100% of their students rent. Only 13% reported that their children paid for rent entirely by themselves.   This is likely why some parents contemplate the option of purchasing student housing, instead of paying rent to landlords. But is it a smart financial move for parents to purchase student housing for their children?   The answer isn’t exactly a definitive “yes” or “no” and several considerations come into play. There is a calculated risk involved with making a financial commitment and investing in student housing. Too often, parents make their decision by only looking at the “potential” amount of money they could save, but fail to take into account other important factors.    Here are several factors that need to be assessed before making the decision to invest in student housing for your children.   1. Profitability: In certain instances, inexperienced student housing landlords can overshoot the profitabili......
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Property Management and Upside-Down Mortgages

Property Management and Upside-Down Mortgages

 

pilera underwaterSo the Great Recession is a thing of the past. Or is it? Secure, well-paying jobs are still few and far between, and the real estate market — though on a general upswing — still hasn’t fully recovered from the beating it took, leaving many homeowners still underwater.

Faced with foreclosure, a lot of folks have vacated their homes and started renting them out to let tenants pay the mortgage while they wait for values to come back up. It’s not at all an uncommon practice, but what is new in that space is the use of property management.

Since the vast majority of these homeowners didn’t choose to become landlords, they’re farming out some of the the responsibilities to property management companies so that they don’t have to deal with the day-to-day issues that can eat up a lot of the average working joe’s free time. Others are finding property management software to help them manage the property.

In both instances, newly minted landlords with little experience or desire are starting to realize the value inherent in property management, which can only be a good thing for the property management community at large.

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Government Shutdown: Real Estate Buyers who are processing their Mortgage Should Seek Consultation

Government Shutdown: Real Estate Buyers who are processing their Mortgage Should Seek Consultation
In general, home owners and buyers need not be concerned with the government shutdown affecting their investments.  The stock market has responded to these changes, but it is much slower for the real estate market which tends to be more stable.  However, there are more potential risks to individuals that are processing there mortgage.  Why is this the case?  Your mortgage is with the bank.  Where does the bank get its loans from?  The government.  More than 90% of mortgage activity is provided by Uncle Sam, a large chunk of which is government owned Fannie Mae and Freddie Mac.   Another sizable chunk is the Federal Housing Association which will be severely understaffed.  With fewer underwriters to process the new loans, they could be significantly delayed.  In other cases, if it takes a long time for the government shutdown to end, real estate investing will significantly decrease and the market could drop by 1.4%.  Solution: The best way to protect against this concern is to get your loans from a commercial provider instead of the FHA.  This will provide the investor more financial security.  If you don’t have a mortgage, you’re in the clear, but keep an eye on the news.  If the government shutdown lasts for a month or more, there still could be significant impact on the real estate market.  Hiring a property management company can help to ensure that you are not wasting any money on your property investments and reduce the chances of having little to no return on ......
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