Good morning to the Holiday Season of Thanksgiving;
Commercial Lending
The Business and Investor Side of Our Business
Focus
My 35 years in the lending business keeps me one step ahead. The Good News: It provides you trained and learned knowledge, plus a full range of qualified associates – keys to success. It opens doors to a vast array of lending needs and demands.
Michael Ryan & Associates is here for you. We have excellent lenders, with the best lending options, and the best rates. Fitting with our mission to bring clarity to the process. You are our focus. Call. Please know, I depend on your business, your introductions and referrals. THANK YOU!
Special Attention: Retail Shopping Centers and Investors
In the world of financing, we are two-fold: 1) Commercial investing: Retail Shopping Centers, etc. and 2) Residential Investors. What’s of special importance: Our established relationships with an array of funding partners. This allows us to place loans for all types of real estate properties – Hospitality, Storage, Office, Industrial, Ag, and Construction & Development loans. Most helpful: In a challenging market, we have a lender you need. Added advantage: Our team has the talent pool to turn a rejection letter into acceptance.
Why so? Because our financial solutions are dedication to meeting the needs of a successful closing. Our Goal: Maximize long-term profitability of our commercial real estate investors.
The Economic Realities:
Changing Markets and You
1) Federal Reserve: Main Stream Media – MSM – often trapped by their ‘Social Narrative’, often miss the critical points being measured by the Federal Reserve. This can leave gaps in understanding and how to better anticipate the next move. Consider:
A) The Fed: The expected 1/4 2nd cut happened. Good news: Most measures suggest and support the continuation of future cuts. Timing is the question. Chairman Powells‘ recent public Q&A brought forth a few ‘sticky’ points as to housing cost in the inflation reports. Yet, other comments – as a whole – suggests the Fed does not expect inflation to creep upward.
B) Future cuts: How will long term rates respond? How will the dollar react?
2) Economic Data-points:
A) Interest Rate Cuts: Most interesting: If you have commercial rates tied to the 10-year Treasury, you might note such yields can increase after the Fed begins a rate cut cycle. And with the 2nd cut behind us, we still see the trend-line for Treasury rates moving upwards. Not as high as the end of May, yet holding quite firm above 4.25 %. It may seem counter-intuitive yet dropping interest rates and apply inflationary pressure to the market.
B) California Performance: From Chris Thornberg, a highly respected economist – as to understanding future outcomes – provides a big summary as to California. From his perspective, California is doing great. Yet, there are noticed areas of concern. One such is housing. We will discuss his several other significant points of intrigue, in coming months.
From his perspective, a singular solution. Build more. Below, I will offer an expanded view point. Consider: if a new person is hired, a new housing unit is needed. Without, California is poised to trend sideways – while other major metros grow. Trending sideways is a two-fold negative: 1) no growth = no growth, 2) no growth stops momentum, needed for new growth.
C) Inflation – CPI: Good news, inflation remains near the target: 3 % vs. 2.0%. In review: Sectors for OER (Owners Equivalent Rent), Airline Fares, and Used Car prices, were up. However Otherwise, if you back out OER and motor vehicle insurance, the year-over-year Core CPI drops to 0.6 %. I still await de-inflation by increasing supply.
Further, the PPI (Producer Price Index) also bumped up, but still within the expected range. However, last month’s upward revision did not sit well with the market. In detail, the PPI is running at 2.4 % ,with the Core PPI at 3.1 % – year-over-year. Meaningful reduction of the numbers on PPI and CPI are not expected until early 2025. This is due to how the Y-O-Y numbers are figured. For each new month added, you drop off the oldest. This will benefit future inflation numbers.
Good news: Wage growth is outpacing inflation.
D) Yield Curve: Normality has returning, after 2 plus years, being inverted.
My Perspective
Shortfall for home building. All candidates spoke of it, yet the details of the problem were not. It will take far more than a drop in the affordability index. Mere words are not enough.
The puzzle: Everyone is for more housing, but not in our backyard. NIMBY is often the major stumbling rock pointed too as the ‘market bad actor’. But to this we have the societal shift of the average 1st time home-buyer. Once being in their early 30’s, they are now in their late 30’s.
Part of the problem: For many past years, interest rates were kept artificially low, resulting in appreciation levels accumulating to near 30 %. Further, there was an obvious avoidance of needed easing of regulations controlling new subdivisions. Ones‘ needed to increase supply. Now, you have the recent jumps in inflation and subsequent rapid rise in rates.
Sadly, this trifecta will likely continue into the future. Why so? In 2024, 600,000 units were added to market – multi-family. This new supply was the 1st year in many, where rents stayed near flat. However, due to the recent rapid rise in rates, building numbers will likely drop to 250,000 units per year – both 2025 and 2026. Outcome: Supply/Demand problem will continue.
Yet, for some, this supply/demand imbalance will keep prices high, margins strong, stock prices good for major home builders and construction industry, as a whole. Truly a problem of wide-spread negotiations where everyone need to come together and all parties layout their case. No single party, to the solution, will blink alone. Hence my perspective that this issue will not be resolved anytime soon. Give a call, I would love your input and suggestions.
Call us. We are ready to help today.
I hope you find this letter instructive for both Commercial and Residential investing.
Key: Discipline, Preparation, and Patience. Plus a professional putting your uniqueness, first.
Good quality isn’t cheap. Cheap often cost more.
Thoughtful Consideration – Call Today
Commercial investments: The news is quite interesting: Apartments showing signs of slowing, pretty much limited to the Sun Belt. They have done great. They have adding 1.5M doors, with mid-range pricing performing better – lower vacancy and minimal rental increases. In the areas surrounding the Bay, retail is brighting, as population is growing and supply problems are yet fully resolved – over a decade. Outcome: Vacancy is down and leases terms longer.
Commercial success: It continues. The depth of our lending partners allows us to work with certainty of execution. We are getting it done. We have the proven trust and credibility!
Notable Success: This month is the sale/exchange and subsequent cash liquidation of a highly appreciated property. No tax bill for 30 years. We have a number of tools and methodologies to put off Capital Gains taxes for highly appreciated assets. Call today.
More Good new: From our friends, business in the tax-deferred exchange business is booming. If you are considering moving or trading your investment assets into a set of similar assets, let’s talk about saving you money. Call today. We can provide helpful direction and news on ALL the benefits of deferring Capital Gains taxes. KEY: Know your full range of options and benefits, before simply pulling the “sell” trigger. This first step is most important.
Consistent calls – Business opportunities: Good news, healing from the CoVid disruption continues. With this, much is going on in the investing market – AI expansion to name one. Regardless, the challenges of the new frontiers, there is one constant: We love digging deep and finding solutions that meet your expectation – regardless how unique the propery.
Know someone in need of such help? Call us !
We are ready and now is the best time to start preparing for tomorrow.
Why We Are Unique: The breadth of our lending partners: 1) business-purpose loans – with light documentation, 2) re-development building projects for housing, plus 3) commercial property purchases. How does this work? It works because we are – a team. 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 the Good News: Our track record. It shows why our phone keeps ringing. Let’s talk. We can help.
Loans Coming Due? Lets talk. 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 keep due dates – especially the annual lender requested financial statement. Key: Stay ahead of upcoming due dates. This keeps your lender smiling. Good organization has worthy benefits. We are ready to help.
NOTE: If you have non-payment concerns, please call.
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 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 Holiday season. With all the financial talk, it is most important to celebrate life with those who love you. Be well. Be safe. We stand with you.
