In uncertain economic times, what do we know?
The cost of goods has increased. Energy costs are increasing. Interest rates are up and still rising. Supply side disruptions are becoming more frequent. If purchasers pull back from the market, it could lead to a recession. Are we in a real estate bubble? The SFR markets probably are, but what about commercial?
What can we do?
Lenders like a “sure thing.” This means “middle of the road” investing is more likely to get financing that special use property or “out-there” renovations. With some exceptions. As economic conditions change, lenders look to new and relevant strategies to keep their lending active.
For example, lenders today are more open and interested in working with a ground-lease scenario. Lenders are also more interested in solar energy alternatives, either in new builds or retrofits. Lenders are also interested in developers who are repurposing property – hotel to multi-family, or even office to multifamily. As a commercial real estate investor, pay attention to these trends and select your buying/renovating strategy to match these lender interests. In other words, go where the money is.
What are your fundamentals?
As a builder/developer, or owner/investor:
- What is your experience with the asset class you are invested in?
- Is the performance of your property better than average in your market?
- Do you have an ability to spot opportunities in your sector?
- Do you have the right business relationships? (agent, lender, insurance, contractor, property manager, etc.)
- Are you able to source equity on your own?
If you have positive experience in each of the aspects above, you are a prime candidate for commercial lending, and even banks will be interested in looking at your deals.
But what if you don’t?
Who do you know who can help you? For absolute new investors, the best strategy starting out is to partner with someone more experienced. If there isn’t a real estate investment club near you, ask a commercial realtor (or two) to introduce you to other, more experienced, investors. Other sources of leads are financial planners and CPA’s.
Sofia Capital Ventures offers new, and experienced, CRE investors the benefits of our collective experience (over 40 years) to advise and consult, as well as to provide connections to the best funding source for your project. Check out our Professional Education page to learn more about we can assist you.
CONTACT US directly for all your commercial lending needs.