Commercial Investment Real Estate is the magazine of the CCIM Institute, the leading provider of commercial real estate education. CIRE covers market trends, current developments, and business strategies within the commercial real estate field.
Issue link: http://cire.epubxp.com/i/164181
mercial real estate, while still putting themselves in a position to build equity and longterm wealth. Ofen, these loans do not take much more time than a conventional loan and they are fully amortizing (up to 25 years), with no balloons or call features. Tese loans may also include money for improvements and equipment, as well as working capital, so borrowers can satisfy more than just the real estate need of the business. While interest rates are ticking up, they will likely stay at relatively lower levels as compared with prerecession rates. However, this should motivate small-business owners to act soon since rates will eventually increase to more normal, higher levels. With the general economy continuing to recover, small-business owners' confidence should grow with their sales levels. Investing in hard assets such as commercial real estate will assist them in gaining control of their business's occupancy costs. Since we are at some of the lowest real estate value levels in years, there's a window of opportunity to purchase real estate at this time, as these values will start to rise as the economy continues to improve. In addition, infation may be around the corner, so having control of their real estate expense gives small-business owners much greater control over expenses going forward. Targeting Ready Buyers Small-business owners ft the prof le for one of the most financeable deal types today: owner-occupied, general-purpose properties in ofce, retail, or industrial; with loan amounts from $500,000 to $3 million. Tis target is the most attractive asset class for lenders. Banks are eager to lend in this asset class and within these targeted loan amounts. Commercial brokers and sales agents who focus on this target market should increase their sales commissions. What not to focus on are commercial investment property loans with no national tenants, shorter term leases, loan amounts less than $3 million, in areas with populations less than 50,000. Tis continues to be the no man's land in commercial real estate fnancing. Many of these loan requests have sat dormant since 2007. It's unfortunate for the owners, but the market reality dictates lending options. You may fnd a local bank or two that will be interested in a stronger version of the investment loan that is described above, but you are not going to have a robust pool of lenders to work with to ensure a successful closing. Focusing on what is easy to fnance puts commercial practitioners in the position to make a higher percentage of overall commission income for the foreseeable future and earn a piece of the recovery. Jeff Rauth is vice president and business development officer for Titan Bank, a national PLP, SBA lender. Contact him at jrauth@titanbank. com. Join CCIM members around the country ARING I as they take one day to make a difference N M in their communities. CCIM Chapters TY C NI U and individual CCIM members will take one day from September 9 September 22, 2013, to volunteer for a local cause in the 2nd Annual Community Caring in Motion. ION OT COM M Make the difference C CIM CCIM.com Visit volunteer.ccim.com for more information. September | October | 2013 15