In the fast-moving landscape of real estate combined with other factors such as the feds fund rate, interest rates, and the economy, it is difficult for buyers and investors to decide when to buy investment properties. That’s why it is important to have a good grasp of the financing landscape before submitting an offer. More importantly, it is crucial to establish good relationships with lenders and mortgage brokers who will be able to help you navigate a volatile and ever-evolving market.
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Our guest today, John Brickson of McKinney Realty Capital, brings us up to date with the current real estate landscape paying close attention to financing and loan options for buyers. He details the factors that affect interest rates and gives his thoughts about better financing options. Listen now and find out why he thinks buying in today’s market is a better opportunity than buying in last year’s environment.
Key Points From This Episode:
- John’s reading of the current debt market conditions and his outlook on federal funds rate, financing and interest rates including non-recourse fixed-rate Fannie Mae and Freddie Mac loans.
- Why bridge loans have become less attractive in financing acquisitions.
- Why John’s company is recommending clients to go into finance and acquisition with a bank loan rather than agency loans that are driven by debt service coverage with lower loan-to-value ratios.
- Why are cap rates not tracking closely with interest rates, what accounts for the gap, and will this trend continue?
- What other factors affect cap rates and interest rates apart from the Federal Reserve’s intervention?
- What strategies can be used to minimize instances where the lender abruptly changes the loan terms to the purchaser’s disadvantage?
- Why it’s better to buy in 2022 versus 2021 and why John advocates people to buy now.
- John’s outlook on the massive bridge debt loans that are maturing in the next two years.
- John’s contact information.
“In 2021, the financing was great, but the purchase prices were too high or not attractive. And then in 2002, the purchase prices are much more attractive, but the financing is not.”
“I would much rather buy in an environment where the purchase prices are more attractive, and the financing is not as attractive.”
“Why it’s nice to buy in 2022 versus 2021? It’s a buyer’s market. I would advocate people to buy currently because you have some more flexibility on the purchase and sale agreement and the terms of that sale.”
“It’s critical to understand the financing landscape before you go under contract and before your earnest money goes hard.”
About John Brickson
John Brickson is the Founder and Managing Principal of McKinney Realty Capital, a commercial real estate capital advisory firm based in Dallas, TX. Over the past 11 years, John has worked in Commercial Real Estate Finance and Investing as a lender with banks and private equity firms, as well as an intermediary. Since entering the intermediary side of the business in 2019, John has closed over $730MM in financing across over 75 loans. John launched McKinney Realty Capital in 2022 with the goal of building an independent capital advisory firm that offers independent, objective advice for its clients and capital partners. In addition to working full-time as an intermediary, John is actively invested in multifamily and industrial properties as a passive investor and operator. Originally from Kansas City, John graduated from DePauw University in 2011.
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