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Last week, the 10-year yield moved up a bit, but nothing too significant.  With the FED increase and the Italy/ECB concern somewhat offsetting their respective impacts, we sit in the recent trading channel.

Strategy Meetings to Educate:

For those that have been reading this weekly email for a while now, it is probably clear that I attempt to share something from my previous week that might provide some insight.  Looking back over my week, there was an abundance of calls desiring an overview of commercial real estate investing.

As we are late in the current real estate and stock market cycles, I found this interesting.  Perhaps it was just a coincidence, or it might be that more and more people are seeking alternatives to the stock market, or none of the above.  Candidly, it might just be that more of my contacts have figured out to use me to help their clients better understand the pros and cons of investing in either real estate or the stock market.

All I can share is that there seems to be more people looking to obtain commercial real estate for the long-term.  It might be that folks want to get into the market before interest rates move up too much which would reduce the cash on cash returns.  I am counseling them to not be too aggressive with their leverage so that they can absorb surprises easier down the road.

Investing objectives change as each of us goes through life.  We start out more aggressive typically when we are younger.  And, then we reach a point where fighting for that value-added deal becomes less desirable.  It is when one has accumulated a fair amount of wealth and now wants to know how to enjoy it.

That is why I like the strategy meetings.  It is when we can all use our vast experience to really help clients understand the choices that best fit their goals.  This is how we go deeper with clients.  It is where we really help protect their interests through education.  It might not be as fast as just doing a transaction.  However, the impact is noticed and appreciated.

Kind of like appreciating a certain championship basketball team that was expected to win and did just that….

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 5.25% 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:

Bisnow shared “Industry’s Low Debt Levels Could Create Safe Investment Opportunities During Economic Downturn.”

The Commercial Observer reported “Wave Ciao: Fear of Italian EU Exit Helps US Bond Yields, CRE Interest Rates.

Reuters reported “Fed clambers back to positive real rates, now debate is when to stop.”

The Motley Fool reported “16 Ways Malls Are Filling Space Besides Stores.”

The NY Times reported “Piece by Piece, a Factory-Made Answer for a Housing Squeeze.”

Forbes shared “The Best Strategy In A Shifting Real Estate Market: Add Value.”

 

See the table below for approximate interest rates.
Type Rate Fixed Term
Apartments 4.365% – 4.900% 3 to 10 year (30 yr amortization)
Commercial 4.675% – 5.200% 3 to 10 year (25 yr amortization)
SBA Lending Call for Options Call for Options