In these economic times, uncertainty has been the prevailing reason why buyers, sellers, professionals and lenders have been slow to act. Regardless of all the government sponsorships, bailouts, promises and incentives, there are few professionals that have truly been able to navigate the market, it takes hard work, discipline and commitment to ones profession to travel through the debris of collapse.
There is always an adjustment period when a market shifts dramatically, a period of time where industries need to adjust to the new terms and conditions of the business environment, lenders hedge their losses, consumers tighten their belts all in the name of coming out a survivor. It is this adjustment period that often creates the harder times, simply because no one knows how to navigate the ever changing rules…in the case of commercial lending, the ever changing qualifications, underwriting, and credit.
There have always been programs out there for small cap and middle market buyers to take advantage of higher return commercial property, but even in good times the number of brokers claiming to understand, have and utilize these programs has made it difficult for some buyers to find the loans to achieve their dreams. This is why every now and then we need to have a shake up; “Shake the tree and let the dead wood fall” I was once told, “Get rid of the useless debris in order for the old oak to flourish” is what a Real Estate Broker once said to me, an ancient man in the business who was around before there were laws.
This isn’t a wise old saying, or some ancient wisdom, it is hard fact and we need these shake ups to get rid of those unscrupulous people who make it difficult for integral professionals to flourish. We’ve always believed that and made sure our relationships with lenders was real, we’ve always tried to help our borrowers fit into the programs the lenders offered and for a time just about anyone could get a loan, but today…it’s not the same. And, today, over the last couple of years, commercial lenders and commercial buyers have been seriously misaligned.
By the end of 2008 we were still getting requests from commercial buyers for 100% financing…we can laugh about it now, but it was frustrating to have buyers/borrowers completely unaware that the economy and lending climate was not the same as 3 years earlier…and it was actually disheartening that we couldn’t accommodate those loan requests nor create a structured deal that would provide for fulfillment of the request. But now borrowers have woken up a bit more and long time, strong financial groups are still here, as both the fly by night lenders and unscrupulous professionals have been washed out by the tidal wave of economic downturn.
We are very prideful of ourselves that we have survived and will continue to thrive, as our professional habits and relationships have afforded us the opportunity to fund loans, and we are very happy to see that the consumer has come to terms with the way things are. For us, we are seeing less resistance from both borrower and banker in making commercial loans and while the small cap and mid market borrower is still seemingly under-served, we feel that there is a huge opportunity for these loans to be written. We’ve watched our lender pool grow to 200 lenders, then over the last couple of years dwindle down to a mere dozen and grow over the last 6 months to 52, for us this is a significant sign and we are diligent in working with these lenders and their core products to serve these small and mid cap markets.
We never really noticed, but as we look at our lender line, we realize that these companies, with whom we submit loans to, are all well established long standing firms that have enjoyed success through all types of markets, and for us that is a realization that we’ve chosen the right path in our profession.
As much as we would love to close 25 million dollar hotels every month, that doesn’t serve the need of an economy at large, we believe the $250,000 mixed use SBA borrower is as important if not more important than the large cap hospitality owner and we will not treat either one any different than the other and that is another philosophy that we didn’t realize we worked by…it has always been that way.
Maybe this is just an advertisement for touting how good we are and why you should do business with us for your small commercial clients, but then again, it is a statement that says no matter how bad the RE and CRE markets have been, we can all learn something about ourselves from what some see as economic tragedy (we see it as opportunity).
There is a sliver lining to every dark cloud.
http://www.Precisionfinanceandrealtypartners.com
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