Good morning to Summertime;
Commercial Lending
The Business and Investor Side of Our Business
Our usual take on the market is to explore the economic realities vs the social narrative pounded by MSM. Hence the more positive feel to my writings. For some, they are sitting on the sidelines, responding to the negativity of the headlines – the social narrative. Some are actively leaning into the market based on their tracking the economic narrative.
With 35 years in the lending industry, we take an encompassing approach to the data. We bring our proven talents to help fund your investments: office, retail space, construction project, home, rental units, or vacation getaway – owned solely or as a percentage. If this speaks to you, give a call. It’s what we do.
The Economic Narrative:
1) Interest rates: Again, the concerning inflationary numbers – in the latest CPI report – are auto insurance and housing. For fun, if you took both out, CPI becomes Zero. Thus, most categories measured, are cooling across the board. Last week, 30 and 10-year bond auctions went very well. Such is an indicator investors are feeling more confident rates are peaking. Thus they are locking in long term yield.
Looking at the 10-Year, the range has between 4.00 to 4.74%, since February. Good news: we are currently trending near 4.20 %.
2) Residential Real Estate: New home construction is doing well, however, future permits show signs of slowing down. Why? Interest rates, labor – cost and availability – coupled with extended development times. These keep builders cautious – at best. As a result, no relief from low inventory in the mid-price range is on the horizon.
San Jose has becomes the first City in the State to allow ADU’s to be sold off – separate from the main house. Now to see if staff will facilitate or find ways to clog up the process.
On the flip side, we have an acquaintance who just completed a 14M home that is available, and another who missed out on an 11M purchase. There is activity at all levels. Lets talk.
With all this, an interesting note: The past years residential real estate value increase added 1.5 T to household net worth.
3) Commercial Real Estate: Locally, a few challenges. Chase Bank is not extending or re-writing many First Republic loans – some residential, but mainly commercial. I am also hearing of SVB loans being sold off, then having the same issues. If you have, or know someone who has a FRB or SVB loan, please.. please call me. We have the broad base of lending partners to facilitate financing. Don’t let the Social Narrative lead you astray.
4) Retail: Hat-tip to our friend Chris Thornberg with Beacon Economics. He was the recent head-line speaker at the SJSU Economic Forum.
Credit card delinquencies are trending the lower half of historical. Restaurant receipts are at all-time highs, as is domestic travel. The consumer is still shopping strong, wages are up, unemployment is muted at best. Things are pretty good.
Good News: While office space is a problem, the reality is we have seen an increase in such space by 40 % – over the past decade. This without a corresponding increase in either population or housing. All our perceived real estate problems go away with a massive push to get housing numbers up. Our goal: Best matching our investor clients, with the best lending options and customized programs. Let’s talk, today. Early preparation is key.
While I and many, bemoan the net 3.5 Trillion Covid stimulus injected – used to offset the economic loss of l.5 T due to Covid – I did miss an important the fact: In the end, this infusion resulted in about 35T increase in household net worth. Powell and the Fed got it right.
Call us. We are ready to help today.
I hope you find these insights and economic news, most helpful for Commercial Investing,
as well as for our Residential work! Key to Both – Discipline, Preparation, and Patience.
Banking and Financing: DIY or using a Broker.
DIY: Benefit: You can trade on your historical connection with your Bank. Downside: You are not always sure they are actually getting it done. The Bank loan agent brings the deal in the door, but they are not allowed to tell you the percentage of actual closings.
Broker: Yes, you do pay a point – Except with SBA and residential lending. Benefits: Our connections to lending sources, interaction with industry groups, and continued conversations with our peers. This brings about true and open competition able to quickly adapt to the shifting landscape and your unique situation. Do you benefit from hiring Mike Ryan? Time proves to be Yes. And with future challenges ahead, all the more reason to call. As a Broker, your victory is my win.
Good News:
Our commercial successes continues. The depth of our lending partners allows us to work with certainty of execution. We are getting it done, because we have the proven credibility !
An area we are receiving the most calls: Business opportunities. We are 3 years out of the CoVid disruption and many are doing well. A lot is going on in the investing market – AI expansion to name one. Regardless the challenges and the new frontiers, there is one constant. We dig deep in seeking solutions for the unique projects of our clients. Who do you know scratching their head, regarding a project? Call us ! Now is the time to begin the process.
Consider as well, the breadth of our lending, from 1) business-purpose loans – with light documentation – to 2) re-development building projects for housing, plus 3) commercial property purchases. How does this work? It works because of who we are. We offer a broad range of lending partners able to provide flexible loans, excellent programs, and great terms. It is how we help move your life forward and our track record shows it. It is what keep our phone ringing. Let’s talk. We can help.
Consider Loans Coming Due: They are in high demand, as evidenced by our increased work to refinance various commercial properties. Recent statistics show 30 % of maturing loans were refinanced, 25 % were modified and 40 % are in default. In todays market of risk and uncertainties, it’s key to check loan parameters and due dates. For certain, don’t miss the annual lender requested financial statement. Key: Stay ahead of coming due dates to keep your lender smiling. Good organization is most worthy.
Yet, if you have troubles, please note: We can help with loan modifications
Good News: We have great lending partners. They respect our work and attention to detail. This is good news for you, as they trust our approach and loan packages. In response, we carefully strive to maintain the quality of their depository relationships. This is called team chemistry and is what makes our lending relationship, a winner. Join our team.
You have heard me say: It starts with a first conversation. Let’s talk today.
Enjoy your family and friends this Spring season. With all the financial talk, key is who we have around us and with us. Be well and be safe, knowing we are hear for you.