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This past week, the 10-year yield moved up slightly.  I stared at the news, graphs, and the German Bund to see if I saw anything worth mentioning.  Candidly, I came up with zero insights.  Even though the FED is planning on raising the discount rate come December, commercial and residential interest rates remain relatively low.

Checking out the table at the bottom regarding Commercial and Apartment interest rates, one can see that the 10-year fixed rates are still under 5%.  At this point, interest rates do not seem to be affecting purchase and refinance decisions.  Most uncertainty now is focused on tax reform.  There are a few articles below which address this concern.

Articles of Interest:

Brookings shared “It’s time to gut the mortgage interest deduction.” Although this is not a popular position for those of us affected, it is good to understand the perspective and position being presented.

The SJ Mercury News shared “Who really pays the estate tax? Not who you think.”

CNBC reported “A quarter of all taxpayers would pay more in 10 years under GOP tax plan: Revised report.”

The Registry reported “City of San Jose to Acquire Two Parcels for Parking for $14MM, Citizens Concerned About Future Use.”

Commentary – Residential/Commercial Referrals

I attended two meetings this past week that were focused on Residential to Commercial referrals and also the reverse.  For those that have been reading this email blog for some time now, it is clear that I am a proponent of building teams in support of client objectives.

In the meetings, there was emphasis on protecting the client’s interests and surrounding the clients with experts in their respective fields.  Note that there is a danger in having an inexperienced Realtor handling a Commercial transaction.  And, there is legal exposure as well.

For the moment, I am going to look at this opportunity from the Residential Realtor perspective.  This could also apply to Residential Loan Professionals who may be the first contact when a client has a commercial loan need.

If you wish to be the focal point for your client’s overall needs, then I suggest you find professionals on the commercial side that you feel share your values and are very good at what they do.  Your clients look to you to help translate the world of real estate and financing as they do not know what they do not know.  If your skill set is strong in organization and follow-through, then you can save your client a lot of time and energy by building a team to protect your client’s needs.

From the meetings I attended, it was clear that everyone needs to respect each other’s time.  What that implies is that you need to know enough to be seen as a professional trying to help a client.  If your client has some sort of commercial need, then do enough due diligence to truly understand what support is required.  You want your virtual partners to want to work with you because they know you won’t be wasting their time.

Building true relationships between Residential and Commercial professionals will help all involved.  It takes some time, but it will benefit your clients which will provide more referrals and introductions.  Finally, please focus on doing what is in the best interests of the client.  If the clients are taken care of, then there will be plenty of business to go around.

This approach will take effort, but Residential Professionals are often the first place clients look to for their needs.  Realtors and Residential Loan Originators can provide some great protection for their clients by vetting virtual business partners.  This will prove to be a huge benefit to the client as they will be able to focus on their needs versus having the additional burden of reviewing unknown professionals.  Should you decide to implement this approach into your business model and need assistance, feel free to give me a call.

That’s it for this week.  As always, I welcome any of your questions regarding the above or for strategic financing support.

See the table below for approximate interest rates.

 

Type Rate Fixed Term
Apartments 3.875% – 4.580% 3 to 10 year (30 yr amortization)
Commercial 4.195% – 4.880% 3 to 10 year (25 yr amortization)
Construction Call for Rate Call for Rate
SV Commercial Lending