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Can I Negotiate With Commercial Lenders for a New Loan?

Can I Negotiate With Commercial Lenders for a New Loan?
Commercial lenders include commercial banks, private lending institutions, hard money lenders, financial groups, and mutual companies. They are mostly used for commercial real estate acquisitions, short-term fundings or businesses that need resources to address seasonal orders or cater to sudden demand.   Their key responsibilities are handling prospective clients by identifying their needs, interpreting their financial statements, securing collateral, and gathering other required documents such as insurances and agreements. Once the borrower has submitted all the requirements, they can start negotiating the rates and terms of their commercial loan to lessen the burden that interest rates can incur.    What can be negotiated   Here are a few options on what can be negotiated:   1. Interest Rates   Interest rates will significantly impact their monthly payments. Negotiating the lowest possible interest rate will help their cash flow, especially at the beginning of their loan. During this time, renovations are still being completed for new businesses, and the cash flow is at the lowest. These rates may be set for 5 to 10 years, and if they can find lower rates now, they will be able to have more flexibility in the future.   2. Closing Costs   Negotiate that the seller covers some or all of the closing costs. These may include taxes, title fees, recording, and attorney fees. In some transactions, these fees are already included in the seller’s full asking price, and if not, they may be negotiable.   3. Quick Transaction   They can save time by n......
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How Will a Rise in Interest Rates Affect the Commercial Real Estate Market?

In the past couple years, overall interest rates have risen several times in the United States. According to many experts, they are likely to finally stabilize in 2020. However, they have already risen sufficiently enough in 2018 and 2019, and we cannot be sure that the same won’t happen by the end of 2020, or especially the year after. With that in mind, the commercial real estate market needs to start preparing for a possible rise that can have significant effects.  But what are those effects? How does a rising interest rate affect the commercial real estate market? If you want to know the answers, you've come to the right place, as this article aims to give you all the information you need. Let's take a look. How Interest Rates Affect Real Estate Values For those who are unaware, interest rates, like the ones on Treasury bills and interbank exchanges, have a massive effect on the value of commercial real estate and all property, for that matter.  That’s because they influence the ability of people to buy property by increasing or decreasing mortgage capital costs. However, that’s only one part. Interest rates also affect capital flows, supply and demand, and much more. When all of that is considered, we can conclude that interest rates have a profound effect on the commercial real estate market in a wide variety of ways.  However, we are only interested in the higher interest rates and how they affect the commercial real estate market. And that is a ......
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How Do Higher Interest Rates Affect My Investment?

33.jpg  Interest rates always exert a significant effect on any investment one can make. That is naturally also true for real estate investments. In general, higher interest rates have an adverse effect as they go together with a poorly performing economy. Higher interest rates always prevent consumers from buying goods and thus investors lose on investment opportunities. In the end, sales and profits drop as well. But how does all of that affect real estate? How exactly do higher interest rates change real estate investments? Real Estate and Interest Rates The first thing you need to know here is that many often confuse what exactly affects real estate. Many wrongfully assume that the direct factor in real estate evaluation is the current mortgage rate. The influence comes from interest rates, as they have a profound effect on mortgage rates, which then, in turn, affect real estate worth. However, that’s not all. Interest rates directly affect capital flows, which means that they also affect the supply and demand for property, which in turn changes the price of real estate. There are several other factors involved which we don’t have time to go into. The important thing is that all of this is naturally not an exact correlation. With so many factors involved, it’s never possible to predict whether or not higher interest rates will result in a slower real estate market growth, fewer sales, and subsequently lower prices. The Effect of Higher Interest Rates First, it’s important to note that when we look at......
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What Happens When You Default On A Loan You Personally Guaranteed?

In addition to the property securing a loan, a personal guarantee is also used a promise or agreement to hold you personally liable for a debt.   By personally guaranteeing a loan, in addition to the property as collateral for the loan, the Lender also has recourse against you personally. They can go after other assets you own under these terms.  Lenders prefer these types of loans. It gives them something of value more than the asset, which has the loan against it. It also gives them more security.  It lets a lender feel you will take better care in managing the investment to ensure its success. The personal guarantee will typically not come into play unless the asset which is foreclosed upon, will not cover the liability/outstanding balance due the lender.   This balance can be substantially higher than the loan balance, as it also typically takes into account the penalties, accrued interest, and legal fees a lender may incur. In some cases, you can discharge your liability for a personal guarantee by filing for bankruptcy relief (unless the guaranteed debt itself is non-dischargeable). However, keep in mind the bankruptcy will need to be a personal  bankruptcy to potentially eliminate any personal guarantees, and not just a bankruptcy for the asset. If your personal guarantee includes a security interest in your personal assets, the lender will typically have a lien on your property. A bankruptcy discharge may only wipe out your personal obligation to pay back debts. It doesn’t eliminate liens. This me......
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Real Estate Trends | Real Estate Crowdfunding: An Easier Way to Raise Money for Companies

Real Estate Trends | Real Estate Crowdfunding: An Easier Way to Raise Money for Companies
One of the biggest problems facing today’s entrepreneurs is the lack of access to financing. In fact, 98% of the businesses that are able to secure an appointment with a venture capital firm fail to secure financing often as a result of a single element in their business plans. The Small Business Administration reports that, regardless of the level of legitimacy of the business’s need, banks in the United States are lending less often. In 2011, banks had over $607B worth of outstanding American business loans, all of which were for $1M or less. In comparison to the same period of time in 2008, that’s a reduction of about $100B. As discussed earlier in the week, crowdfunding, is the practice by which informed investors pool their money together into a single deal. For real estate investors, that would be to acquire property. In return, the investors earn a share of the profits once the deal is complete. Aside from the smaller risk, the “crowdfund” investor is able to benefit from having other informed investors involved in ensuring their deals’ success. It’s clear that the advancements in technology have revolutionized the ways in which we access and gather information. Researching an investment was once more of a cumbersome process that took not only time and money, but know-how and access to previously publicized resources. These days you can research everything from property profile data and lean information with nothing more than an address or parcel number. Once you’re invested, there is technology available that allows you to track and manage all ......
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