Howdy from the metropolis of Cedar Crest, New Mexico.
I just got back from my father-son retreat with my boys Colt (9) and Dakota (7). It was fun to hang out with other fathers but it was a lot more fun to be with my boys when they wanted to hang out with me. I was competing with their friends for time. What is up with that? When did I become “not cool”? I am thirty seven years old! I am too young to be “not cool” …right?
I am currently refinancing my shopping center in Southwest Texas. I am on my second attempt to refinance and I have been trying to do so for six months now. The shopping center is a solid performer with regards to cash flow, tenant strength and occupancy (100%). It is also in a great city with regards to the local economy. So…what is the problem? Where do I start?
There are a plethora of items that I did not see coming…NO ONE did. But from what I understand….my mortgage broker(s) are telling me about a “perfect storm”:
- Interest rates are extremely volatile…so lenders are increasing their margins to protect themselves
- Real estate values are dropping
- Underwriting in tightening
- The lender pool is shrinking
- Increased environmental concerns
And on and on. Yes, I could keep going because the reasons are limitless and the excuses are shocking. I do have to say that my mortgage broker is going out of his way to make things happen BUT the “hold ups” are unprecedented.
So…what have I learned and what advice can I give you?
- Start now – If you are planning to refinance in the next six months to a year, start now. This is a great area to be proactive in especially if you are dealing with defeasance, prepayment penalties, environmental issues, short leases, bad credit, etc. You will want to know before hand what issues you might be facing and start addressing them right away.
- Do business with mortgage brokers you have used before or come highly recommended – I have been burned once (okay..twice) by using a mortgage lender that I did not have any experience with and that was not recommended. Get recommendations from me or other real estate investors who have had good experiences with mortgage brokers. Most investors are happy to recommend someone from their team. Avoid real estate mortgage brokers from internet forums and those in the back pages of newsletters. Are they all bad? Of course not, but none of us have time to waste trying to find a mortgage broker.
With all that is going on in our economy, financing commercial projects require a lot more elbow grease than it did a year ago. Being proactive and having deep relationships with solid mortgage brokers are the best ways to get your deal done in a tough financing market.
Until next time…..rob