Tag Archives: interest rates

Ep. 122 Livingston Hessam: What You Need to Know About the State of Mortgage Banking and Real Estate Lending

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mortgage banking and real estate lendingIt’s a new year and change is in the air. With financial regulation changes sure to come and the recently announced Federal interest rate increases, it’s no wonder mortgage banking and real estate lending is hot on investors’ minds.

This episode, we have Livingston Hessam, who just returned from this year’s Mortgage Bankers Association Commercial Real Estate Finance and Multifamily Housing Convention & Expo.

Listeners will remember Livingston from episode 70, in which he gave us a recap on multifamily mortgage banking and real estate lending from the 2016 conference. Livingston is Vice President of Walker & Dunlop‘s Tampa office. Livingston brings over 12 years of experience in real estate lending and finance solutions to Walker & Dunlop, which just celebrated it’s 80th anniversary.

Livingston offers up a recap of the 2017 CREF/Multifamily MBA Conference and discusses key themes from the past year and the current state of mortgage banking and real estate lending.

What’s In Store for Mortgage Banking and Lending

Agency Annual Caps

  • Fannie Mae & Freddie Mac each allocated $36.5 billion for 2017 (same as 2016)
  • Certain loans and portions of loans are excluded from the cap (i.e. affordable and green/energy efficient)
  • Fannie Mae & Freddie Mac multifamily production totaled over $110 billion in 2016.
  • Fannie up 30%, Freddie up 20% from 2015
  • Expected to capture 40% of total multifamily volume for 2017 ($50-55 billion each)

Commercial Mortgage-Backed Securities (CMBS Loans)

  • Risk-retention regulations put in place in 2016, narrowing amount of CMBS lenders
  • Post-election stability, but more selective lending market
  • CMBS lenders ramping up bridge-lending

10-year Spreads

  • Life-insurance (50% leverage and under): 125-135 range
  • CMBS (75% leverage): 250-280 range
  • Agency (80% leverage): Low 200s range
  • Federal interest rate sees .25% increase
  • Expected to increase to 2.75-3% by end of year

Hot Topics

  • Trump Administration
    • Tax reforms
    • Dodd-Frank roll-backs
  • Retail lending
    • Publix most active retail buyer in FL
    • Grocery chains are buying out plazas after lease terms or taking right of first refusal on new lease terms
    • Reduced supply of grocery-anchored retail
    • Strong retail appetite for real estate lenders

Investor Resources

  • In addition to his V.P. role at Walker & Dunlop, Livingston is President of the Society of Real Estate Professionals (SOREP). Formerly the Tampa chapter of University of Florida’s Bergstrom Council, SOREP hosts networking events and seminars to professionals and gives back to Florida universities. SOREP focuses on all aspects of the real estate industry and is open to all. Click here for more info.
  • Walker & Dunlop offers comprehensive real estate financial solutions for all income-producing properties. For more info, visit Walker & Dunlop website.
  • To contact Livingston directly, click here.

 

 

Ep. 50 – Three Types of Creative Mortgages for Real Estate Investors

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Successful investing needs capital. For real estate investors, that often means mortgaging existing properties as a source of attaining capital. Traditional lending through banks and other financial institutions is often the method of acquiring hard-money loans. Sometimes though, the loan approval process may be too time-consuming or their lending practices may be too restrictive for investors.

Keyur Patel (top, left) and Naim Hamdar (top, right) of Synergistic Funding share three types of creative mortgages that are available to real estate investors as an alternative to traditional institutional lending.

  1. Commercial Mortgage-Backed Securities – CMBS Loans
    • Currently strong alternative loan product
    • Cyclical nature – this type of loan dissipates with market downturn
    • Undisclosed, non-restrictive cash-out feature
    • Assumable
    • Non-recourse
    • Quick execution – loan sold as packaged, traded security or bond
    • Competitive Interest Rates compared w/ institutional lending (< 8%)
  2. Bridge Financing
    • Often used as alternative loan for investors making balloon payments on existing mortgage and institution not offering re-financing options
    • Up to 65% loan-to-value
    • Typical terms – 1-3 yrs. w/ balloon
    • Interest rates between 8-12%
    • Quick-closing
    • Non-Recourse
    • Creative underwriting – “carve-outs” prevent loan being taken out with malicious intent
    • No minimum for financing, but $100 million ceiling
  3. Line of Credit
    • Designed for seasoned investors w/ multiple projects per year
    • Private lines of credit offered to investors
    • Available for entire term (1yr)
    • No annual fees if not used
    • Once used, 1% monthly fee applied + 9-month repayment term
    • Quick-closing
    • Relatively quick approval turnover (1-3 weeks)
      • Investors must have at least 2 successful closings per year
      • 1 yr. tax returns
      • 3 months bank statements

For more questions on these types of creative mortgages for real estate investing or to find out about other services Keyur and Naim offer:

Call Synergistic Funding – 813-333-5128

or email them at info@synergisticfunding.com

 

Ep. 44 Carl Hudson – Did You Know the Federal Reserve Monitors Florida’s Real Estate Market?

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hudsoncarlpThe Federal Reserve is institution many are aware of. As the central bank of the United States, it serves as the standard for banking as well as regulates and moderates national interest rates. What many don’t know is that the Federal Reserve also has many other responsibilities.

Carl D. Hudson, Ph.D. is the Director of the Center for Real Estate Analytics at the Federal Reserve Bank Atlanta. The Atlanta division of the Fed (1 of 12) oversees much of the Southeast U.S., including Florida. Dr. Hudson is responsible for identifying and analyzing systemic impacts in real estate, economy, financial institutions and consumers. This week he shares his insights on the post-recession rates of Florida’s real estate market and its relation to the rest of the nation.

  • Florida is real estate market economy
  • Immigration major factor in FL real estate market
    • 2000-2007 – >300k/ year in population growth
    • 2008-2009 – <100k/ year
  • Economy is improving slowly
    • FL employment growth rates – 3.4% annually, highest in Southeast U.S.
    • Only .2% growth from pre-recession peak
  • Interest Rates may see increase over time
    • Short-term rate increases likely
    • Indicative of returning economy
    • No dramatic increases
  • Multi-Family markets in FL
    • 40% year-after-year construction growth rates
    • Major Markets: Tampa, Ft. Lauderdale, Miami, Jacksonville, Orlando seeing positive trends in construction
  • Miami
    • Largely driven by foreign market
    • July 2012: 4200 units under construction; June 2015 20,000 units under construction
    • Strengthening of U.S. dollar may inhibit foreign investment
  • Yield rates
    • Lower rates than pre-recession, but functioning at rates equivalent to early 2000s
  • Changes to investing
    • Prior to recession – financing investment involved a deposit
    • Post-recession – “pay as you go” financing on the rise
    • Greater commitment to investment, not easy to walk away
  • Growth trends for Florida?
    • Panama Canal reopening could mean major impacts on East Coast port cities
    • In FL – Jacksonville, Tampa, Miami, Ft. Lauderdale

To find out more from Dr. Hudson’s department, visit The Federal Reserve Bank of Atlanta’s website and click the Center for Real Estate Analytics link

Click here to read the President of the Atlanta Federal Reserve, Dennis Lockhart‘s speech on the national economy

Stay informed with Dr. Hudson’s blog, Real Estate Research

Ep. 41 Ryan Severino: Things You Should Know About CAP Rates, Interest Rates & Asset Classes in Florida for 2015

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images The recovery from the 2008 economic recession has been a slow one with real estate being perhaps one of the hardest hit industries during the recession. In Florida, investors in all asset classes are feeling uncertain about rising costs of rental rates and projected interest rates adversely affecting cap (capitalization) rates.

Ryan Severino joins us this week to discuss the recovery from the recession and its effect on real estate investment. As a senior economist and Director of Research at REIS, one of the nation’s leading real estate data providors, Ryan can provide expert insight on national recovery and how it translates to a state level. He also clears up the uncertainty over cap rates, interest rates & asset classes in Florida real estate.

  • In 2008, U.S. experienced deep balance sheet recession
    • Excess debt built up in national economy
    • Flow of credit ceased
    • Slow recovery period
  • 2-2.5% GDP growth rate annually (next several years)
  • Class A inventories on rise, B & C inventories diminishing
    • Results in top-of-market rental rates in all asset classes
  • Southeast FL markets experienced above average recovery
    • Supported by foreign investment
    • Rents rising quicker than income recovery
    • Miami, Ft. Lauderdale becoming unaffordable markets
  • Central, Northeast FL markets still generally affordable
  • Multi-Family properties becoming much more competitive
    • Cap rate compression beginning to plateau
  • Commercial properties experiencing early-stage recovery
    • Room for cap rate compression
  • Cap Rates not effected solely by interest rates
    • Tied more closely to economic recovery
    • NOI (net operating income) effects cap rates

Ryan’s Tips:

  • Real Estate is a cyclical investment market
  • Follow proven market trends

For more information and research data on a variety of asset classes, visit the REIS website here