skip to Main Content

Well, we got a reprieve on the 10-year yield this past week.  Hopefully, by now, you realize that interest rates are affected by many factors.  At best we are guessing as to why rates go up or down.  This week’s guess would be the falling apart of the summit with North Korea.  Rates are still historically low; and they certainly matter more for those that are pushing their loan to value ratio hard as they pursue an investment (or attempt a flip).

As margins are reduced, it is more important than ever to help your clients do their due diligence.  With that said, let’s roll into this week’s commentary.

Virtual Reality and Problem Solving in a Real Estate Transaction

It is the Memorial Day weekend and I am trying to figure out what might be helpful to many in this article.  As I spend most of my time solving problems for my clients and business partners, I find myself thinking that what I do is somewhat like a VR video game.  At this point, I am not sure how far off the rails I will be going with this piece, but thanks for hanging in there so far.

We all realize that clients and business partners bring us unique challenges all the time.  And, as our experience grows, one can start to see patterns that point us to certain typical problems that require attention early on to avoid costly mistakes that affect clients.  In discussing commercial transactions here, I often like to refer to the chart below.

Great Marty, so why does that really matter?  Well, remember that this is what our clients are faced with when they are in a real estate transaction.  And, even if they do this 24 by 7, that is a lot to handle.  It is so easy to miss one of the interconnections; and that is where major unnecessary expenses can be incurred.  I will also tell you that people remember your mistakes much more often than they will just take for granted your ability to calmly avoid a mistake in the first place.

Now back to my VR inference earlier.  In that chart above, I see the Client circle as being a revolving chair that can be hit by any of these other circles.  In this pseudo virtual world, our job is to jump into that chair with the client to protect them from potential mistakes or oversights.  Taking on the role of protector takes experience and an ability to stay quiet in the moment.  However, each of us can get better at this by just surrounding ourselves with extremely competent professionals that treat the client’s money as their own.  And, a lot of times, it just means caring enough to go deeper with the client.

This certainly helps cement your relationship; and then leads to referrals and introductions to clients that hear about what and how you do what you do.  My advice has always been to slow down a bit to help the client in front of you completely.  This can be in contrast to those (these are the folks that are typically in interrupt mode) that want to chase new clients all the time.  You work hard to get that client.  Just make sure you can see things from their perspective.  Protecting them fully will position you for a relationship that will be much more rewarding.

Hope all are enjoying their off time!

Investments Opportunities for Purchase with Strong Cash Flow:
Back on the January 15th update, I wrote about “Creating Residential Listings Using Commercial Opportunities.”  Each week,  I am presenting some of those investment opportunities to better educate all on what is actually available.  Note that these are all Single Tenant Net Leased properties that have listed in about the last 10 days.  In addition, I assumed a 5% loan with 50% down.  This is just a small sample of what is actually available.

If you assume investors in the Bay Area are getting a cash flow of 3.5%, then you can see the potential improvement with these properties above.  This approach is great for the investors desiring increased cash flow, an opportunity to get out of daily property management, and/or taking the challenges of rent control off the table.  Should you wish to discuss any of these or others, then give me a call.

That’s it for this week.  As always, feel free to give me a call with any of your strategic financing needs.

Articles of Interest:

NREI reported “Silicon Valley Wants to Tax Big Tech Just Like Seattle Did.”

CNBC reported “Trump signs the biggest rollback of bank rules since the financial crisis.”

NREI reported “Investors Still Can’t Get Enough of Industrial Properties, Experts Say.”

The SF Business Times reported “Why Big Pharma is finally discovering the Bay Area.”

Realtor.com reported “Reforming Lending Reform: 3 Things Home Buyers Should Know About the New Law.”

See the table below for approximate interest rates.
Type Rate Fixed Term
Apartments 4.375% – 4.940% 3 to 10 year (30 yr amortization)
Commercial 4.695% – 5.240% 3 to 10 year (25 yr amortization)
SBA Lending Call for Options Call for Options