Breaking News: Multifamily Financing Secrets Exposed!
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RISING RATES
Sky-High Insurance: When Taking The L Makes More Business Sense
In other news, I want to discuss the skyrocketing cost of interest rate caps, which is putting pressure on commercial real estate (CRE) owners. According to Chatham data, the cost of a two-year cap on a $25 million loan at a 4% strike rate has shot up from $97,000 a year ago to $569,000 today due to changes in the Secured Overnight Financing Rate forward curve. This has led many owners to sell their assets, rather than purchase a more expensive interest rate cap for a refi loan.
While this situation is challenging, it presents opportunities for brokers, as there are likely to be more sellers hitting the market soon. Sponsors with struggling properties may sell for a loss or return the keys to their lenders, leading to more transaction and loan sales volume. Source:?CRE Daily
Thank you for your continued partnership with Groundswell Assets. We remain committed to creating value for our investment partners through innovative and effective investment strategies.
Thanks for reading and have an excellent week!
Benjamin Yeager
By Joshua Christensen:
Looking to invest in multifamily real estate? Financing is a crucial aspect of the deal and can make or break your investment returns. In this blog post, Joshua Christensen covers different ways to structure financing deals, including agency loans, private equity, CMBS loans, and more. Learn about the pros and cons of each option, as well as what to look for in terms of terms and amortization periods. As a passive investor, you don't have to worry about the loan application process, but understanding how financing works is key to making informed investment decisions. Read on to find out more.
In this informative video, Benjamin Yeager , the founder of groundswell assets multifamily investment firm, sits down with Chaim Sherwinter , the Vice President of Meridian Capital Group , to discuss the ins and outs of financing apartments using agency debt.
Throughout the interview, Benjamin and Chaim cover a wide range of topics, including the benefits of using agency debt, the types of agency debt available, and the qualifications required to secure agency debt financing. They also delve into the nuances of the multifamily market, discussing how factors such as location, property type, and market demand can affect the financing process.
Whether you're a seasoned real estate investor or just starting out in the industry, this video is packed with valuable insights and practical advice for financing #multifamilyproperties using #agencydebt. So sit back, relax, and tune in to learn from two of the industry's most experienced professionals.
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IN THE NEWS...
Sizing up Silicon Valley Bank’s real estate exposure
The failed lender had $8.3B in mortgages and $2.6B in commercial-backed debt on its books. The stunning failure of Silicon Valley Bank, which was?shut down?by state regulators and taken over by the Federal Deposit Insurance Corporation on Friday morning, sent shockwaves through the tech industry. But it could have major implications for real estate too.
Though the bank primarily lent to venture capital and private equity firms, about 15 percent of the loans on its books were secured by residential mortgages and commercial real estate, according to its 2022 financial report.?
Seeing an Opportunity, CRE Debt Funds Raise Massive War Chests
With many traditional lenders becoming more conservative in a high-interest rate environment, debt funds see a chance to grab market share.
Debt funds are enjoying a “lender’s market” in a landscape where many large banks have retreated, which is creating more opportunities to do deals with higher-quality borrowers and lower risk, while still capturing enhanced returns.
Once the buyer’s market arrives, it might not last long
In Mike Madsen’s almost 20 years in the real estate business, he has seen the lending market shift overnight on two occasions.
The first was in the spring of 2020 when COVID-19 shut down the economy. The second time was two years later when the Federal Reserve began raising interest rates.
“It was like a lightswitch going off overnight,” said Madsen,
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