When it comes to Build for Rent Financing, its likely that for any development of a BFR community through the project lifecycle from acquisition through stabilization four different loans will have to be sourced and executed. The biggest challenge for developers in this space is replacing the Land + infrastructure (horizontal) loan with the vertical. No one likes starting a development project with financing lined up for only the first portion of the project. What happens if the market shifts during your 18 months of horizontal and then your vertical lender doesn’t like your market, or their total loan dollars for your project drop by 10% and the lender expects you to make up that 10% difference with a surprise cash infusion?
We often find ourselves complacent with “working” results and apply the why fix it, if its not too broken attitude. This applies to the landscaper, email services, car insurance, and even the barber who gives us bad hair cuts, yet we continue to go to him out of habit. But a capital partner? Having the right commercial real estate capital partner(s) can not only deliver more returns into your pocket, it can grow your business significantly.
To fully understand and thrive in commercial real estate one has to understand much more than the simple “bricks and mortar” that make up a building. A successful commercial real estate broker (developer, investor, or lender) wears many hats and should have knowledge across a variety of different industries and disciplines.
As many much smarter ‘guys’ than me (and smarter women, too) are reviewing the last year; and struggling with Forecasts for 2019, at this time, there has been a lot of discussion about Fed Policy on rates and their impact.
We think some useful language, is to characterize ‘asset bubbles’ or the asset inflation that these policies may have created as a real thing. Actually, many are referring to this period as the ‘Bernanke-Yellen Asset Inflation’ period.
Challenge #1: Accessing net lease ‘product’ or properties that match a Buyer’s stated criteria. Reproducing the cash flow of their existing asset is a point of departure, only. Then, we need to establish “What is a risk-adjusted return?” OK, you say, you want a limited risk new investment. No problem; but since the Great Recession with most compressed cap rates in memory (Higher prices), we have to sort through the “Net Lease Wheat from the Net Lease Chaff”. Continue reading The 1031 Net Lease Broker Conundrum
Mike Marmis is the Managing Director of YAM Capital, a Commercial Real Estate bridge lender. YAM Capital is a privately held bridge lending firm with a focus on lending to Arizona Commercial Real Estate. It offers structured and funded bridge loans from $2M to $50MM and prides itself in expediency and certainty of execution. YAM Capital is part of American entrepreneur and philanthropist Bob Parson’s YAM Worldwide group of companies.
LD: What career path did you want to take when you were in college?
LDCRE.com website hosts three separate companies that work together to best serve our community. LDCRE owns and manages the technologies and code powering the online marketplace. LDCRE Investments is a commercial real estate brokerage firm focusing solely on buy-side referral brokerage, connecting its registered investors to listing agents on matching investments. Leavitt Capital is real estate investment banking firm facilitating debt and equity capital for commercial real estate.