Facts & Figures
Fact 1:
Foreign acquisitions of US real estate increased from $1.5 billion in the first quarter to $2.5 billion in the second quarter. Through the end of July, foreign investors have acquired $4.3 billion of US commercial properties, representing just under 10% of all investment activity year-to-date. Acquisitions through the end of June, up 210% year-over-year, already exceed last year's grand total of $3.9 billion by nearly 12%.
Top Source Countries of Foreign Investment Is US Real Estate: Canada, Israel, South Korea, Switzerland, Netherlands, United Kingdom, Mexico, Germany, Malaysia, Australia. 2010 YTD through July 31, 2010
Source: Real Capital Analytics Inc.
Fact 2:
Overall Cap Rate Analysis - The average overall cap rate decreased in 26 Survey markets during the third quarter of 2011. Investors expect overall cap rates to either hold steady or decline in most markets over the next six months.
Moody’s reported that its Commercial Property Price Index (CPPI) was up 5% in July and that most of the increase was due to middle market asset pricing: As in June, the broad middle market (non-major assets and non-distressed assets) drove the bulk of the overall increase of 5.0% in the July CPPI. Middle market transactions have accounted for approximately 60% of volume in recent months. Distressed asset sales accounted for 27.6 percent of the overall sales volume, with the distressed index inching up 2.6 percent. While the “middle-market” segment is reportedly the contributor to the price increase, I am not sure how long that trend will last, as m-o-m transaction volume has fallen off a cliff.
Source: CRE Console Blog
Fact 3:
California August Home Sales. An estimated 37,734 new and resale houses and condos were sold statewide last month. That was up 8.8 percent from 34,695 in July, and up 10.2 percent from 34,239 for August 2010. An increase from July to August is normal for the season. California sales for the month of August have varied from a low of 29,764 in 1992 to a high of 73,285 in 2005, while the average is 48,344.
DataQuick's statistics go back to 1988.
Source: DataQuick; DQNews.com
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Are you familiar with the Battle of Thermopylae? You might be familiar with the movie titled 300 that fictionalized a retelling of the Battle of Thermopylae in 480 B.C. The plot revolves around King Leonidas, who leads 300 Spartans into battle against Persian "g_d-King" Xerxes and his army of more than one million soldiers. Although all 300 Spartans died, their deaths inspired the different city-states (Greece) to unite against the Persians, beginning the Battle of Plataea, the final land battle during the second Persian invasion of Greece, ultimately defeating the Persians and marking the beginning of Persia’s decline. I can’t help but equate the process of securing financing in the current lending environment tantamount to the Battle of Thermopylae! Here’s why:
Translated - 87% of all clients are denied and 90% of all applicants that are initially approved don’t close.
Now you see the challenge before all who seek financing and what the average borrower client is dealing with. For commercial & residential mortgage brokers, this presents an opportunity to transition clients who do not qualify for conventional loan products to hard-money financing.
One of the most powerful benefits of private money lenders is that the lending process is based on a private investor’s needs, concerns and requirements rather than an inflexible, cookie-cutter lending institutions. Instead of making decisions with the use of a committee, private money lenders make decisions alone. While a certain amount of due diligence must be done, private money lenders are able to assess and respond to the underwriting needs as soon as they are provided by the borrower. As individuals, they have the means to respond to a borrower’s sense of urgency and can fund loans within a matter of days, whereas traditional lending institutions may take months. Private money lenders have the added flexibility of avoiding certain regulatory constraints and internal processes that traditional lending institutions can do nothing to avoid. This allows private money lenders to solve problems and think outside the box. Lastly, because they are answerable to their own wallets instead of the wallets of shareholders, private money lenders are not stuck with predetermined loan terms and yields to maintain—as only they need to be satisfied with the return on the loan. So what makes Hanover any different? Unique, symbiotic relationships with our investors. People enjoy doing business with people they know, like, and trust. This may seem an elementary concept, but it is often lost in daily business. Not with our investors.
Our source of funds! Hanover’s source of funds is analogous to Greece, comprised of different city-states – that is, money derived from “private” sources [commonly referred to as “Investors” or lenders. ] such as: Individuals, Trusts, Partnerships, Real Estate Investment Groups, and Retirement Funds. We close loans using private investor funds. As such, we facilitate rapid decision making and swift transaction closings, certainty of closing, privacy of our borrower’s financials, flexibility allowing creative solutions within the scope of HMC’s underwriting criteria and experienced professional management to analyze, structure and close the transition.
So, the next time you have a client seeking an approval, consider private money and call HanoverMC. |
Equal Housing Opportunity Lender