With so much market upheaval and interest rate changes, you need to fully understand the lending environment before going forward with deals. To tackle this subject we welcome back James Eng, a mortgage broker who has originated over $800 million in multifamily loans. Early in our conversation, James provides an overview of how the lending landscape has changed due to COVID and recent rates changes. After talking about the ways in which the market has normalized, James reveals that while the cost of deals is the same, that the cost of debt has gone down.
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We explore what this means, along with the definitions and connections between cap and interest rates. James discusses new lending options that have opened up before we touch on what investors can expect in five years when they might want to follow through with their exit plan. Later, we touch on what areas of underwriting you should pay extra attention to, why you need to guarantee enough liquidity before signing a deal, and predictions for the next six months to a year. Near the end of the episode, James talks about how you can use YouTube to raise your profile and explain deals with investors, and why communication is the hallmark of a good operator. The professor of multi-family financing, tune in to hear more of James’s insights.
Key Points From This Episode:
- Introducing James Eng, the professor of multi-family financing.
- How COVID and recent announcements have affected real estate lending.
- Hear James’s perspective on how deals have been returning to normal.
- Cap rates versus interest rates and the connection between the two.
- New options that have opened up; getting a floating rate loan with an interest rate cap.
- Why you should care about the rates that banks use to trade with other banks.
- James shares what interest rates he thinks investors can expect in five years.
- Insights into what you should consider when underwriting and approaching lenders.
- What your reserve or emergency account should look like.
- Real estate predictions for the next six months to a year; rates are flat, occupancy will hold.
- What James would have done differently if he were to do his first deal all over again.
- How James has recently done to improve his business.
- The importance of communication to being a good operator.
- Developing your competitive edge by skill stacking.
[bctt tweet=”We’re seeing with a lot of deals, the price hasn’t changed but the cost of your debt has gone down by 20, 25% — James Eng” username=”whitney_sewell”]
Links Mentioned in Today’s Episode:
About James Eng
James Eng serves as a Senior Director for Old Capital. James is actively involved in financing commercial real estate with a focus on multifamily in Texas. He has financed over $500 million in multifamily properties. Before joining Old Capital, James underwrote over $750 million in loans over 8 years for the acquisition or refinance of commercial properties at GE Real Estate.
Prior to his work at GE Real Estate, he completed GE’s Financial Management Program (FMP) at GE Capital with rotations in Connecticut, Colorado, and Texas across multiple businesses. He received his undergraduate finance degree from the McCombs School of Business at The University of Texas at Austin. He is currently invested as a limited partner in 21 multifamily properties totaling over 6,000 units.
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