the-commercial-investor.com

[...] the-commercial-investor.com » Blog Archive » Commercial Lending … [...]

I’d like to add my two cents worth as this is a subject near and dear to my heart.

One clear issue that I see is that as an industry we are not very good students of history. And for those that are, there will be options in 2009 and beyond.

However, for those looking for commercial financing at their local or regional Bank, or worse yet, the CMBS Market, you will be disappointed. Possibly even bankrupt before 2009 is over!

There is a major change occurring in the Commercial Financing market. And to understand this change we need only look back to the 1980’s and the Savings & Loan Crisis.

You may recall that prior to the S&L Crisis most American’s obtained their Residential Financing at their local or regional Bank.

However, during the S&L Crisis Bank’s stopped funding residential loans. Did that mean there was no money to be found for home purchases and refinances?

Initially yes, however as time went on a new player entered the market, and subsequently emerged as the main source for residential financing from that point forward.

And today they are still responsible for most residential real estate loans.

I am referring to the Residential Mortgage Broker of course.

Fast forward to today, and we have a similar situation in the Commercial market. You will find some (few) Banks that will say they will fund a commercial deal, but when it comes time to actually fund, they fail to follow through.

There is no CMBS market to speak of.

Yet, I know of a Commercial Mortgage Brokerage that in the next 30 days alone will be directly responsible for the funding of close to $1 Billion of Acquisition & Development loans alone.

That’s $1 Billion in A&D financing in 30 days, yet according to the media there is no A&D money in the market.

This Commercial Mortgage Brokerage is now bigger than some of the Lenders that were in the market just a year ago.

Additionally, this Commercial Mortgage Brokerage has seen tremendous growth in the last year+ as they fill the void left by the Banks who won’t fund, the Lenders who are now gone and the now non-existent CMBS market.

I know this to be true because I am a Branch President for this company. And while I see it happening right before my eyes, I am shocked at how few who proclaim to be experts (present company excluded, of course) do not see what is happening right before their very eyes.

Make no mistake. Loan are more difficult in this market. There is no hiding this fact. However, there is plenty of money available.

PLENTY! One only needs to know where to look. It requires the ability to be open minded. To understand that in economic crisis like what we are experiencing now, new players emerge.

Money does not just disappear from the market. It simply moves. Smart Entrepreneurs understand this, and they simply look to where the money has moved.

Money never evaporates. There is plenty of money available to the Commercial Investor, Developer, Professional or Entrepreneur.

Just open you eyes a bit wider, and stop letting the media tell you what can and cannot be done. Most of the people reporting on this crisis do not understand it. They are “Reporters”. Not Investors.

Stop taking advice about commercial financing from Reporters. Start trusting your instincts again.

They money is available.

Dike, I agree that there is, and will be buying opportunities for those who are skilled in purchasing commercial properties. For those that do not feel they are skilled enough, I think you’d agree there is great training available to help them become ready.

You mentioned there is plenty of money on the sidelines waiting for the markets to stabilize. I agree, but I’d also like to add there is plenty of money available right NOW.

As I mentioned, in a short 30 day time span of when I wrote my last post, we are directly responsible for closing close to $1 Billion is just acquisition and development financing alone.

Some of which are very large loans. In my opinion, those who want to stay in this market, will need to educate themselves on the changes taking place.

Some already are, and those are the one’s that will be closing and receiving those $1 Billion in fundings.

We are in the midst of a fundamental change in the way commercial real estate, business loans, etc. will be financed. And I understand how difficult it is for people to change the way they do business.

If all you have ever known is going to your local or regional Bank for your commercial financing, or even the CMBS market, it is going to be difficult to take a step back now and see what is changing in your marketplace.

And when you add to that the constant media hype on the negativity, it becomes almost impossible for you to take that step back to see the bigger picture, and more importantly the changes occurring in front of you.

I used the example of the S&L Crisis in the 1980’s to try and explain the specific change I am referring to. It is the best example I can offer of this change we are now seeing in the commercial market.

I guess all some of us can do is to try and educate the market. Although that is a more challenging task with the never ending media hype on the negativity. However daunting, I will continue to get the word out that there is money available in this market.

One thing you can rest your hat on, for those that see this as an opportunity, they will reap the rewards. For those that allow fear to dominate their actions, they will ultimately be the losers when this is all said and done.

I guess Warren Buffett was right when he said, “You want to be greedy when others are fearful, and fearful when others are greedy”

Right now the market is fearful. For the Investors who are associated with you, I’d say this is a great time to be greedy! What I mean is, it’s a great time to be investing in commercial real estate, especially when you know what you’re doing!

Please let those that you come in contact with that there is plenty of money available right NOW for commercial real estate. If they have a strong deal, the money is available.