Commercial real estate trends in 2017 are proving to be profitable for investors despite the increasing challenge of securing competitive financing. Hard money loans are an alternative that many in the industry are turning to.
In the last quarter of 2016, multifamily moved ahead of office for property investments. It took 33.7 percent of the market share as compared to office’s close second of 30.4 percent. Retail, not surprisingly, was down to 13.2 percent, having seen better days before Amazon’s online invasion.
Multifamily’s number one spot is due, in part, to the increasing demand leading to lower vacancy rates and rent growth. The concern among some investors is whether the market can sustain its current rate of growth and at what point will growth become over-construction. Cities, in particular are seeing a multifamily construction boom. Because this potential oversupply is limited to dense urban developments, other markets do not seem to be at risk for over construction at this time. Commercial Lenders are taking location into account, favoring areas that are growing and showing strong employment opportunities.
Commercial real estate investors are finding securing competitive financing more challenging. Banks appear to be scaling back on high-leverage loans and borrowers are needing to work harder and have a track record and solid investment strategy in place. The inevitable rise in interest rates has caused a hesitancy to lock in rates and, according to an article in National Real Estate Investor, “Bank lenders—the traditional source of construction capital—are offering smaller loans compared to the cost of development, when they offer to lend at all.” The bottom line: With new regulations and capital requirements, commercial lenders are not as apt to make commercial real estate construction loans. This is when savvy investors turn to alternative lending for funding their projects.
An experienced mortgage broker specializing in hard money loans will have hundreds of commercial real estate investors that they work with on a regular basis. Programs include multifamily building loans for rehab or new construction as well as bridge loans. These loans are asset-based and do not require extensive documentation. Collateral takes precedence over credit scores. Funding options include construction loans for up to 24 months with monthly draw programs, bridge loans that are designed to bridge the gap between final closing or long-term financing which are short-term 3 to 12 month loans, and longer term commercial loans that can be extended for up to five years.
If you believe you have the perfect opportunity to get into the growing segment of multifamily rentals,
don’t let lack of capital hold you back.
At Level 4 Funding we have the experience and the contacts to help you develop your real estate portfolio. We are licensed mortgage brokers and originators with extensive experience in commercial lending who believe in developing long-term relationships with our clients. We don’t want to just help you with this one investment, but with building your business to the level that it exceeds your wildest dreams.
Level 4 Funding LLC Private Hard Money Lender
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701
About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.