Nearly a decade ago, there was a foreclosure crisis. Realtors were buying old houses and flipping them. Now, the strategy is to buy new and rent out. This new asset class that is taking the private equity market by storm. It started in Arizona, spread to the Sunbelt, and is now spreading across the country.…
Read more
This may be the most instructive training article that I have written in several years, so I strongly encourage you to study it. (Note: This is NOT the subject vet clinic.) Sometimes in the commercial loan business, you have to value a property based strictly on a capitalization rate (“cap rate”). Several years ago, I…
Read more
This is the perfect time to talk about the “quality” of income. Real estate crashes seem to strike about every ten to fourteen years, and it has been thirteen years since the Great Recession. If we were to have another commercial real estate crash, would you rather own a building leased to Betty’s Gift Shop…
Read more
Wow. If you walked into the executive offices of some savings and loan associations in the early 1980’s, the wealth and opulence would have amazed you – walls paneled with expensive oak, glistening marble floors imported from Italy, and genuine crystal chandeliers hanging from the ceiling. On the walls you would often find wildly-expensive oil…
Read more
All too often I see small business owners missing the mark with their marketing. Sure, it’s easy to do when you specialize in a specific industry niche and you spend your time engulfed in industry sector jargon. However, it’s best to put yourself in your potential customer’s shoes and think your marketing through from their…
Read more
When underwriting commercial loans, commercial lenders need to be very careful about properties that are leased out for far more than their fair market value. A story will make this clear. GrandpaJack was a brilliant man. He was also a darned fool. Forty-five years ago, he spotted the fact that Silicon Valley on the San…
Read more
First a correction. A few days ago, I wrote a blog article about how deflation is sweeping the world. In that article, I mentioned that deposit rates in Germany are slightly positive. I am pretty sure that this statement was wrong. Listening to Bloomberg today, I just discovered that the yield on ten-yield German bunds…
Read more
Commercial loan demand in late March and April is typically very, very weak. Commercial real estate investors don’t want to mess around with paperwork, especially when they have just finished the painstaking task of preparing their tax returns. In most cases, their complicated tax returns are not even done yet for 2020, so they have…
Read more
Another Great Recession might be on point. The mainstream business media picked up the same theme on Thursday and Friday, as the Dow lost ground. There will be some severe economic consequences from the coronavirus. Even if COVID-19 never gets out of control in the U.S., hundreds of thousands of small businesses in China are…
Read more
Now that I have mentioned it, you will start to hear the term, Modern Monetary Theory, all of time. The commentators use it a lot on Bloomberg, CNBC, and Fox Business. The financial commentators will often just use the acronym, “MMT”. According to Wikipedia, Modern Monetary Theory (MMT) is a macroeconomic framework that says monetarily…
Read more
