Stop, Really, Stop..Shut Up and Listen…You really need to
Why are we subjecting you to YOU TUBE videos? To get a point across.
If you are a borrower, and you want to borrow money from any form of finance vehicle, you need to have your own dollars to invest.
You need to prove you have money…you need to show your mortgage broker, banker, agent whether residential or commercial to SHOW THE MONEY…
But if you still don’t get it….let’s put it another way:
Why are we bombarding you like some unprofessionals? Because we are astounded by the number of unprofessional requests we get and answers we receive from people asking for MILLIONS of DOLLARS!
For example, we asked for a PROOF OF FUNDS…That isn’t a hard one, we even have a piece of paper that a bank, attorney or financial entity can fill out and verify that you have the money to put as a down payment and cover your settlement costs.
But what do we get? A call, a letter, an email “I can assure you I’ll have the money”.
No….you need to SHOW ME THE MONEY!…Here’s a reminder:
Now these parents are making a future lender! If this kid can get it at his age, it’s time everyone else got it.
When you request millions of dollars, you need to show your money…not your estimation of what you put into it, but your real down payment, your real cash on hand, your money in the bank…DO NOT TELL US YOUR FRIEND IS INVESTING FOR YOU!!!…If that’s the case, Show us his money in your account!
Don’t tell us you have equity investment on the way…PUT IT IN THE BANK, SHOW US A LETTER FROM YOUR INVESTOR’s Attorney verifying the dollars and that they are going to you, show us the CASH, DENARO, DOLLARS, BILLS, BENJAMINS, DINAR, RUPEES, POUNDS, STIRLING, YEN and everything in between…But we want to see real US Dollars in your account that will go towards your transaction.
SHOW ME THE MONEY!
Eric Allen
President
How can bad pizza inspire the commercial real estate community?
In recent months the Domino’s chain has received some serious bashing by the consumer at large…, for the last several years Domino’s took a beating from criticism, especially since communication has exploded throughout the virtual world…(internet).
Facebook, My Space, Twitter, have all tied the world population together with instant communication along with the technology they support…so a 15 year old kid can order Domino’s in Nebraska, and tweet from his phone how bad it was so a 14 year old boy wanting to place an order with Domino’s may have a second thought.
I’m no less guilty of the Domino’s bash, yes, me…Eric (I don’t speak for my partners or our associates)…as a matter of fact I ate Domino’s pizza 3 times in my entire life and each time I was very very displeased with what I shoveled into my face. And now, I hear all the hype surrounding the new Domino’s flavor, ingredients and commitment to the population’s tastebuds. Even Jim Kramer (who I like, when he is in a correspondent role but can’t stand when he is hosting his show…but he gets a plug none-the-less) host of Mad Money, is excited about Domino’s comeback.
KEY WORD…Comeback!
So what does Bad Pizza have to do with the Real Estate Community at large? Did you catch what I said…Key Word..>COMEBACK.
When a public traded company is losing ground in the market, more often than not there are several reasons why the company continues to decline or turns itself around, but Domino’s, may do it better than anyone else simply because they have gone back to basics. They’ve gone back to their customers, the people that eat the food, the people that bought their stock, the people that served to make them what they are today.
GM, FORD, MICROSOFT can’t come close to this action by Domino’s.
So how does a real estate professional learn from Bad Pizza…they apply some of the core lessons that Domino’s is teaching:
1. Go back to basics…if you have to start over.
2. Go back to you what made you successful in the first place
3. Admit your flaws and fix them
4. Find your weaknesses and make them your strengths
5. Go outside of your own little universe and see you and your business through the eyes of other people.
6. Look at your market and figure out how you can capitalize on it’s weaknesses and flaws
That really is all Domino’s is doing and for such a distressed industry, these basic rules apply more than they do to PIZZA! There is no droning on or explanation of these basic business tenants, if you are in the mud of the RE and CRE mess, then you are not new to these 6 basic actions that got you to where you are today. You can rewrite the recipe for the sauce…yes, you read that right, the SAUCE…SAUCE? What possibly could equate to SAUCE in RE?
Your FLAVOR, how you present yourself and your product…bring it back to the raw beauty, bring it all back to the basic flavors, get rid of the flash and processed, mass production style that has become the gray veil of our industry, stand out as a successful individual.
We’re doing it here…we stopped, looked at the last couple of years and said, where are we weak, what to we do wrong, how do we fix it…and that’s the bottom line. Did we learn from Pizza, no, these are basic tenants of good business practice, but we are inspired by Domino’s, a public company, and will continue to stay the course. We are Commercial Real Estate, Domino’s is Pizza, but we’re all navigating the same turbulence and are affirmed and validated by Domino’s and their President, Patrick Doyle.
“You could either use negative comments to get you down or you can use them to excite you and energize your process” – Patrick Doyle, President Domino’s
A Silver Lining
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.
The New Year Comes in With a BANG!
So the markets rally, the Dow is up, commodities, the dollar, the forecasts and predictions…NUMBERS, tons of numbers are flooding the communications web. We’re still waiting for some key numbers…Residential Foreclosures, who is being shut down by FDIC, which large cap commercial loans are not going to get paid in full, which trophy properties will be pick up and what will banks do next to help the backbone of America…Small Business.
We’re not waiting to find out.
Every so often we have to clean house and it seems like 2007, 2008 and 2009 were all about kicking the bad stuff to the curb, repositioning business and what is going to be the next big…important…useful, thing. Three years of constant turmoil and uncertainty, and the truth is that no one was immune. Everyone from credit card holders to large CRE portfolio owners were not sure which way their credit companies were going to go next. On a Tuesday you had a deal, by Friday you were shopping for a new one…it was a slow start to this in ’07, but by the end of last year, it was par for the course.
Then…Happy New Year, 2010 and the markets rallied over these last couple of weeks…and so did many industry professionals. Suddenly, lenders are soliciting brokers, realtors, buyers, sellers…did I miss something? Isn’t what they should have been doing back in 2008, instead of telling every would be submission to “Go….(insert explicative here) yourself”
Okay, so the consumer’s way of thinking has finally caught up with the credit market’s way of doing business…which means it will probably be a few years before exceptions and incredible lending flexibility returns to the prime CRE markets (regardless of cap size), but now both lenders and consumers seem to have a better understanding of how things are being done in this current economy and the marriages of dealmaker and dealer are coming together. At least that is what we are seeing and because we are looking at the consumer mentality we are now looking at our lender mentality as well. Despite the consumer catching up with the lender, the lender’s are going to see a tough time in funding good deals…consumers (as well as us brokers) are not going to sit and put up with disrespect from MONSTER lenders, because REITs, Hedge funds, PE Firms, Investment Banking Firms, are filling the gap between cream of the crop and sell your soul loans.
Like everything else we’re there, but we’re not bowing to the lender, nope…we’re deciding if they are worth our time, money and client…because as intermediaries, conduits, referral agents, service managers, brokers…our client is our bread and butter not some lender who has a “Big (0( on the block” attitude. We’re adding our own BANG to the new year and we’re not buying into the current market numbers…we’ll draw our own conclusions and we are choosing who we do business with. Unfortunately we can’t name the lending sources we think are lousy…legal issues with freedom of speech…but we can tell you that we are already looking at who is coming to the table, who is communicative, who is lending in realistic spaces, who has an understanding of business, who is maximizing the federal resources and so on…and of course who has been closing loans in the last 24 months.
Sure, we’ve been burned over the last 2 years, we’ve seen more promises than there are fairy tales and if we were promised that we would close this or that loan by some of these lenders, there is a good chance we’d see bigfoot first. So we’re recalibrating our vendor pool, re-aligning with certain resources, re-establishing relationships with proven lenders, investment bankers, private equity companies and so on…and we’re also re-entering into the residential lending arena (more on that in the coming weeks).
What’s all this babble here about…I have no idea…I needed something to tell everyone and what better thing to tell than how we’re doing everything we can to provide the best resource for our commercial buyers.
I’m done babbling, send your executive summary to ericallen@precisionfinanceandrealtypartners.com
Atlantic City’s impending doom
We’ve always loved Atlantic City as a market space for CRE investments, it is the “Little town that could” and we believe that it is always going to be such a place for a long time to come.
With Pennsylvania about to approve table gaming, Atlantic City is going to loose a good percentage of it’s patrons who would normally travel from the Philadelphia market, to take their chances with Lady Luck on good old Weird New Jersey, however that is all about to change and the powers that be are wondering how they are going to fill these holes.
Fear not, because this couldn’t come at a better time for the AC market. With the economy and RE markets being such a mess, it’s better that PA approves the table gaming now and rubs salt in the wounds, than later when the AC market sees good, strong recovery. People are still going away during this economic crunch, the populace needs to get away from the stark realities that they face in this market but are not going to be able to, or are willing to spend the dollars on a Vegas weekend getaway…at least not many Northeasterners, Atlantic City offers up some Vegas style entertainment for a fraction of the price.
When Vegas went through it’s conversion to gambler’s paradise to family fun center, many people worried that it would harm AC’s market which always catered to family because of it’s beaches and family entertainment…AC showed them with the development of the outlet center, redevelopment of entertainment venues, thinning of adult’s only market product and continued improvement of hotel-casinos to feed the family need. When PA approved the one armed bandits birth, there was a sense that AC was going to take such hit that would seal it’s fate…the market proved them wrong once again, and now the fateful day is here. PA will be approving table gaming, and this time it is going to take a good piece of the market from Atlantic City.
However, AC will recover…because it still has what no one else does. Selection, location, entertainment, greater branding and it doesn’t solely rely on the tourism to survive.
Timing will be essential when the AC market takes it’s hit, and we don’t feel that the AC market will take a major hit in the large cap credit crunch that will be happening throughout this year, AC is not a skyscraper town like NYC…there are not those kind of dollars in the CRE market there. Good Due Diligence will be necessary and a realistic approach to investment will be needed, no starry eyed Ed Norton scheming allowed…JUST LIKE ANY OTHER CRE INVESTMENT, INVEST WISELY AND DO YOUR HOMEWORK.
And don’t accept the word of one local Realtor™, always perform your due diligence and get second and third opinions and always speak to a Commercial Realtor™ that knows the market, and to prove that we believe in this market, in 2010 Precision is opening a location in Atlantic County for our new NJ CRE Real Estate and Funding Office and…just to prove it isn’t only CRE that we believe in, we will be contracting with a Residential Mortgage Company to manage, and fund the Residential RE market in the Atlantic County Area.
Our point of view on 2010
Everyone is doing it…predicting the future. The reality is if we all had a crystal ball none of us would be working, we’d all be filthy rich, there would be no wars, and the economy would be Utopian, so how are we all predicting what will happen over the next 2 years?
DATA…TRENDS…HINDSIGHT…HISTORY…EXPERIENCE, then we formulate an opinion, which we turn into a hypothesis and we all back pedal when our predictions don’t come to fruition or we let everyone know “We Told You So”. But how does this help our clients, associates and other professionals with their commercial real estate investments and the security of their money?
The idea is to do our best to foresee what has the highest probability of happening and what, where and when might be the best way to invest in commercial real estate; using tools, experience and strategies based on hindsight…or historical trends, our predictions are based on all the above, our experience, data, other professionals information, fact, opinion, and everything in between.
So what do we have to look forward to during the next 12 months? First, looking at the residential market, the bottom is not here, at least not in all markets and the fed has only created a new sub-prime market which is going to have an equally negative effect as a positive one. The tax credits for new buyers, FHA/HUD’s lending criteria not tightening up and the bank bailouts under TARP and TALF are doing nothing but allowing people to purchase homes with no money down, no cash out of pocket and obtaining mortgages under artificial rates…rates which are being depressed by TALF, Fed pressures and Gov bailout money. A good percentage of these new borrowers will go into default in in 2, 3, 4 years because the effect is similar to the sub-prime market that helped to inflate values and collapse markets. Research this yourself, you will find many in agreement that there is a real threat here when TALF expires and rates jump up, values are artificial because not all foreclosures are complete and not all banks are putting REO property on the market.
The commercial LARGE CAP markets are going to have a hard time these next couple of years, which is no secret, it’s been all over the financial news that there are great number of commercial loans which will be coming due over the next two years and these borrowers will be unable to pay off their loans because the value of their property is down…many large cap properties are upside down and banks are going to have to take shorts or manage the property in order to not lose their shirts. How will this effect the mid, small and micro cap markets? Lending is going to get tighter on commercial property which will lead to a greater percentage of lenders only funding the cream of the crop property in ideal locations, in market segments they understand completely and may fight into their real estate asset portfolio (in the even they have to foreclose). Hard Money, Private Equities and Creative Funding will be the savior here, and it is going to be the borrower’s mindset that has to change, because even the most creditworthy borrowers are going to be walking out of the bank wondering “What happened? Why didn’t I get the loan?”
What are the predictions for the next 2 years…There is no hard, overall, national prediction, you just can’t predict a mass regional/national market, everything will deflate and/or recover based on it’s micro economy, regional attributes and local factors. For example, FLORIDA has often been considered the first to deflate the last to recover, but this will not be the case in the commercial market. Florida will be a great cash or hard money buyer’s investment because they will be able to pick up bulk action at greatly discounted prices. Property types may not be an issue in such a discounted space, industrial property may be prime pick for some investors who want a reasonable amount of square footage for subdivision and conversion into, lets say; medical space. Industrial property may be a good conversion buy as The Street predicts a shift from industrialization to a more technology and emerging markets investment.
As an investor, predicting the future of the market is not all that easy, predicting the future of you is much easier, wiser and is something we recommend, regardless of whether or not our experience tells us that Kookamunga might be the next big boom town, if Kookamunga isn’t for you, then keep your focus on Timbuktoo and make your plans for you. We will always be the first to tell you that you are making a dumb move, but we will also be the first to help you figure out how to turn a potential mistake into a profitable move…and if we are wrong, we have no problem admitting it, but it’s unlikely that we will allow you, us and anyone we’re working with to be wrong.
Our prediction for the future? We can’t say absolutely, but we can say that the data points to a multitude of directions, actions, winners and losers…it’s up to us as professionals to make the right choices, capitalize on downturns, maximize upturns and guide our clients into this future.
Another Bogus Email Scam
From:kevin Williams
Please reply me on this(kevinwilliamshelp@live.com)
Dearest One,
Compliement of the day, I am Kevin Williams, The only sun of late mr Williams and Mrs mary Williams. I contacted you after my praying and fasting for God’s direction in search of a honest and sincere person who will sincerely assist me in this transaction. I believe that my contact with you is not by chance but for the good will of almighty God to be done in our life. It is my pleasure to contact you for a business venture which I intend to establish in your country, Though I have not met with you before but I believe one has to risk, confiding in someone to succeed in this life.
Please and Please, Do not be embarased, I prayed for God’s direction to find a honest and truthful person in my life cause I find it difficult to find one here because of my father’s reputation as a wealthy person here before his sudden death, leaving me inheritance of fortune worth ($5. million america dollars and gold and diamond) My intension is to transfer this fund to your country for investment on a lucrative business which you will manage together with me.The fear of this money not raising eye brow here in abidjan, cote d’ ivoire, I decided to contact you, seeking for your honest and sincere assistance because I am too young to handle this transaction. I will give you more information and as soon as I hear from you.
I have decided to offer you 20% of the total amount of money as a compensation for your efforts input in this transaction, that is just for your honest and sincere assistance to me, then you handle and control the investment while i continue my eduaction there in your country and joins you in the investment as soon as i finish my education there.
I will fly to meet you there in your country for the investment and to start my new life with you after the success of this transaction, i hope to establishing a rewarding and good relationship with you. I am waiting to hear from you as soon as possible.
Thanks and God bless you as you sincerely assist me.
Best regard.
Kevin Williams
BE ON THE LOOK OUT FOR SUCH NONSENSE….THEY COME IN ALL SHAPES AND SIZES, BROKER’S ARE OFTEN THE TARGETS OF SUCH EMAIL SCAM LETTERS, HOWEVER IN THIS CASE, THE SCAMMER DIDN’T EVEN USE DISCRETION AS TO WHO HE WAS SENDING IT TO….THIS WAS RECEIVED THROUGH A FORMER CLIENT WHO OWNS AN ADULT BOOKSTORE…HUH?
GOES TO SHOW THE LENGTHS AND DESPERATION OF PEOPLE WHO ARE OUT TO HARM HONEST CITIZENS.
We’re lending direct now
In the current economic climate, it seems that commercial lenders are real skittish on lending and that comes as no surprise since the CMBS market is all but a faded memory, more high volume properties are going into default, banks are taking over projects to finish them out and retail conditions have not healed enough to spur on the growth we need to see real recovery.
While we can’t directly fund more than $1,000,000 and our funds are limited we are doing our part to fill the gap for the small business and commercial property owner. So what makes us different than other private lenders and banks?
First, our history in this business affords us multiple perspectives. We’re not just “banking industry guys” with banking industry dogma running through our veins, we’re real estate professionals who have not only bought and sold residential and commercial property, but have developed it, managed, repositioned and improved property. We’re business owners who have owned businesses outside the real estate and commercial finance industry, we’re landlords, construction workers, and of course we have been loan officers and realtors on both the residential and commercial segments.
So what makes us a bit different but still makes our investors feel secure? Aside from understanding the industry from different perspectives, we underwrite credit differently. We don’t just look at the last 2 years, we don’t just look at the business’ credit over the last 2 years and we don’t just look at the borrower and business. We underwrite the depth of the credit, how old is is, what does the history look like and the patterns in the credit. We do take credit explanations and consider the circumstances behind credit (business and personal) as part of the real credit analysis, and we don’t put much faith in credit scoring since there are contradictions in the scoring system.
This isn’t to say that we don’t look at credit, we just look at it like it’s supposed to be…THE HISTORY. Of course someone who has a 700 score is going to give us a greater degree of security, but that doesn’t mean that the person who has a 550 score is any less secure, circumstances change the score daily.
What else makes us different. In a time of underwriting on current financials, we still take projections into the equation. Not because we are basis our Debt Service analysis on the future, but because we want to see if in a year from now the transaction will qualify for a bank loan or will be able to pay our note if the loan needs an extension.
We also look at an exit strategy, we determine how WE will get you out of our loan, instead of relying on someone else coming up with promises. Our experience as brokers gives us the opportunity to determine which lender you can qualify for because we take those underwriting qualifications into consideration during our underwriting of your loan. For example, we can help structure a transaction for a business and get them into their new property with less money down while we silmultaneously work on qualifying the transaction for an SBA loan in the next 12 months.
Still not convinced that we underwrite better than other Private Equity/Hard Money lenders? You’ll speak directly with the underwriter, you’ll get to pitch your idea, you’ll get to explain your situation, you’ll get to toss out ideas to make us more secure and sometimes those ideas will be taken into consideration. Which bank did you go to and offer them your 50 acres in Oregon and they jumped at it?
The other side of our underwriting is that we underwrite every transaction as if we are going to foreclose on it. We do devalue the property between 12 and 20 percent of the current fair market value, we do take Senior position on the property and do not allow it to be pledged to anyone else, we do look at the project as if we were going to be owning it and moving it forward, we do beat up the property to ensure that if we have to foreclose we can sell it quickly…this is where we might be tougher or softer than most banks and PE lenders…But we’ll never say not interested without first looking at the project.
As a final note, our loans can go as low as $100,000, we can also structure Factoring loans and our terms will almost always include the costs from the proceeds, with the exception of our guarantee fee.
What’s the Guarantee Fee? We have a limited dollar amount, but we have to keep underwriting files and making lending determinations, so we do go over the dollars we have available. In order for us to guarantee the funds will be available to close the loan, we charge a guarantee fee upon acceptance of the terms, which is fully refundable if we fail to fund the transaction…especially since any third party fees that aren’t taken from proceeds are paid directly by you.
In closing this blogvertisement, we want you to consider contacting us if you or your client needs a small commercial bridge loan and look forward to helping bridge the gap in this current economy.
It’s been a while but we’re freaking busy!
We haven’t posted any blogs in a while because despite the economy, we’re busy.
We’ve begun lending small commercial hard money and bridge loans so we’ve been chasing paper, underwriting and closing transactions…whew! and to add to that we are also working on the exit strategies for our borrowers so we have very little marketing and promo time, very little opinion time and this is already on top of our current negotiation contracts, loan placement and commercial real estate marketing.
Or Real Estate Director, Ms. Terry Yimin will be in FL for the month of Nov and then back in NY for the month of Dec, before traveling again in the new year. We’re looking for specific commercial property for some of our real estate clients in these two markets and are eager to hear from owners who are ready to shed their some or all of their holdings. So visit our website or reach out to us for more information on our CRE Buyers.
As for our lending side, if you have a small commercial property and are in need of a loan from $250,000 to $1MM, short term, reach out to MSlotnick@Precisionfinanceandrealtypartners to start the process of qualifying.
As the slow season approaches, well take more time out to blog about our picks for the markets, the future of lending, our opinions on the economy and several other topics that effect the consumer, investor and professionals in the CRE market.
This will be the final blog from now until January and we will not be Twittering much longer either, but don’t fret, we’re not out of business, forsaken our professional brethren or turning our backs on our clients, we’re just busy.
Thanks
Precision Finance and Realty Partners Team
