Commercial Real Estate Topics

A new client, referred to Fidelis Private Fund by a reputable broker, was looking for long-term, permanent financing with maximum leverage available to purchase a storage yard in Fullerton, California.
This loan was not fit for Fidelis Private Fund. However, from our extensive network of lender relationships, we found a conventional lender that would provide a long-term note and the leverage required by the borrower.

When we see rising interest rates, some people think of it as a negative, which can be true regarding the financing cost of real estate. This line of thinking concludes that the value of the real estate compared to other investments in the market will decrease as the cost of investing in real estate rises.

However, what is often overlooked in a rising rate environment is that real estate tends to be a hedge against inflation. In most cases, which is the case now, interest rates are rising, with short-term rates being pushed up by the Federal Reserve to slow down the inflation rate. So, yes, investing costs are increasing but offset through higher rents and increased values.

The San Diego multi-family real estate market remains strong for the 1st quarter of 2022.

See below a summary of the highlights from the CoStar Multi-Family Market Report prepared by Voit Real Estate Services for the first quarter of 2022 and a forecast of what is ahead.

An experienced real estate investor needed a lender to purchase five detached residential cottages in poor condition and subsequently accommodate the borrower with additional funds to remodel the improvements and construct an additional ADU for a total of six units.

Not all private (hard) money lenders are created equal, and they vary in the level of value they provide borrowers.

Here are four questions to ask before choosing a private (hard) money lender:

Finding the right private (hard) moneylender for a borrower’s specific transaction can be challenging considering the various choices for lenders in the market.

We all need a vision to give us purpose in all areas of life, such as our career, business, relationships, and health.

The questions prospective investors typically ask are what is the initial cost, what is the return, how secure is the investment, and what is the timing?

Those are great questions.

However, equally important questions to ask ourselves are, what is the worst-case scenario, what is the probability of it happening, and could we absorb the cost?

Is there real value in a Brokerage Fee Agreement?

In an ideal world, you should have clients with such loyalty that you don’t need a contract to collect a fee.  However, in the real world, you need a fee agreement to perfect your interest in the brokerage relationship and get paid for the transaction.

Have you ever worked hard, spending hours arranging financing for a potential client, and come to find out it was all for naught because you did not execute a fee agreement, and the client went to another lender?

I understand this is the nature of the business; however, there are ways to improve your probability of retaining clients through the close of escrow.

A broker’s constant challenge is to get control of the client early, so you don’t lose the financing opportunity. Unfortunately, I know we lose clients more often than we would like. How do you keep this from happening? There is no easy solution to this problem, but I can give you some guidelines to position yourself to retain more clients than you lose, which will result in you being more productive, efficient, and profitable.