Every lending institution has a lending process to evaluate a sponsor and its ability to lend. This process can be broken down into four categories: (i) preliminary analysis, (ii) repayment sources, (iii) packaging the loan, and (iv) closing the loan. Under each category there are many other processes that occur from policies, regulatory framework, legal, compliance, examination, asset management, servicing, risks management, etc. Interestingly, with all these critical aspects that are utilized to provide loans to a borrower, the three most vital elements are: underwriting, credit analysis and risk management. The above mentioned are the holy grail of lending institutions, whether it’s a traditional bank or non-banking alternative financing company...Read More
Building strong relationships in business is paramount to future success for the parties involved. In this short piece I will not lecture the reader about real estate business principles or how to build business relationship. Frankly, I am presenting five things many great leaders I have had the opportunity to learn from have used in real estate and business ventures to not only succeed, but also build tremendous relationship that last.
#1 – Let go of Judgements
Being judgmental can be an inescapable plague. The most successful business men and women have set their judgements aside to truly understand the characters of their peers, colleagues, business partners instead – thereby solidifying business relationships that yield profitable outcomes for both sides.
#2 – Let go of Fear
It co...Read More
Usually at certain events that particularly catered to real estate and small businesses I often will hear “The entrepreneur bug biting a few.” By this, I am referring to a select few individuals who wake up one day and decide to start a small business without a business plan or lack thereof any plan whatsoever. Now being an entrepreneur and small business owner can significantly impact local economies by creating jobs, empowering young adults at learning other crafts, help a community and much more...Read More
As someone who has participated and underwrote various transactions in the real estate investment trust (REIT) space, both non-traded and traded REITs. I am often asked at certain real estate and business events about mortgage REITs or other components of REITs and what make this sector of the industry appealing. Of course, anyone who is associated with the REIT world knows about many advantages of a publicly traded REIT, which are quite different than non-traded REITS. Non-traded REIT are not on any exchange, and cannot be bought as a stock like a traded REIT that is listed on an exchange (i.e. New York Stock Exchange NYSE). The main difference is truly about the real estate objective.
I conducted a myriad of in classroom and field projects about many REITs (multifamily, retail, offic...Read More
The consensus among many non-business savvy investors is to avoid debt like a plague. It is not debt that is horrible. Au contraire, it is the use and cost of debt that must be looked at more profoundly. A good investment often requires capital or there may be a need for expansion, purchasing new equipment, inventory, refinancing, etc; and debt eventually will be part of the equation. Even when a business is operating at its ultimate peak, which is rare, and making significant profit for managers, and shareholders, there will always be a gap where taking on more debt may be applicable...Read More
MBAofNY, the Mortgage Bankers Association of New York, Inc. hosted their third annual Real Estate Strategic Lending Summit on June 15th 2017 at the Stewart Hotel in Manhattan. Some of the topics covered in no particular order were: alternative lending involving shadow banking, current lending regulatory landscape, market trends, cybersecurity, marketing to millennials, the state of CMBS market, construction lending and risks, and much more. This year the event featured two great keynote speakers (1) Adam Schefter, sports writer, television analyst and NFL insider for ESPN and (2) Clark Gillies, a former professional ice hockey player for the New York Islander with four championships...Read More
In commercial real estate financing there are 3 important metrics that are critical to lenders when they decide to make a decision to fund an asset. In no particular order these metrics are: Debt Service Coverage Ratio (DSCR), Debt Yield (DY) and Loan-to-Value (LTV) – see metrics. Although there are many other metrics when valuating and financing real estate investment, the ones recently mentioned are the holy grail of managing inherent and unknown risks with debt financing. This piece of short article will not be a thesis about these aforementioned terms but rather a short overview to bring more light to another metric, Capitalization Rate (Cap Rate) that can be sometime overlooked in the decision making process when financing properties.
In real e...Read More
There is a giant in the retail world that continues to be a trailblazer. In fact, this giant is the reason why many other retailers have had to change their business paradigm over the last 8 years. This behemoth is not only on the playing field causing disruption, it also exists to demolish any opponent that dares to combat against its structure and oppose its conquering agenda. As societies become more technologically enthrall in how we acquire goods, products, travel, and shop for every day supplies that are needed, this colossal entity is becoming the people’s choice. If you have not guessed correctly which retailer yet, then let me explain further...Read More
It is not a unanimity anymore about what the Federal Funds Rate experts have in store. In 2016 the conversation between many economists and other pundits was mainly about when a hike in rate was going to take place, and in the last quarter it inevitably happened. In an article on my blog titled, “The Most Important Commercial Real Estate Trends in Review 2016 and Expectation for 2017” there is a section about why rates will continue to rise in 2017. For a borrower, the consideration of how moderate rate increase may impact a transaction that is already in the works is essential. In fact, it is more important for your long term business strategies and real estate assets.
Last week I reiterated on my twitter account at www.twitter.com/refivest about the 25 basis points that was initi...Read More
When I was in high school, in Boston, I would take very long drives with my father during some weekend. Whether our destination was the supermarket, a shopping mall, a business meeting, he would always teach me something new. The teaching typically lasted about 30 minutes or an entire hour. It was always about some form of life lessons, failures and successes. On Numerous occasions I pondered why we were driving an hour away as opposed to 30 minutes to a nearby town instead. It was not until my college years and later in life that I realized what my father was doing. Not only was he imparting tremendous knowledge during these long drives but also behaving as a life coach and business mentor...Read More