The following is a message from the President of Long Realty, Rosey Koberlein that she sent October 17, 2008. Long Mortgage only does residential loans. If you're seeking financing for commercial projects, give me a call. I regularly work with several lenders who have consistently worked hard for my clients, and nearly always come through with a solution. And for the cases where a commercial buyer wants a FAST closing, or simply cannot qualify for conventional financing, Owner Carryback financing can open the door.
From Rosey:
With all of the confusion that is going on in the economic world, and the way the media is spinning the story, you would think that money is not available to even buy a home!!! I think it is important for you to hear some truth before you do your open houses this week-end. I asked Long Mortgage to tell their story from this week’s activity---Here you go---
There have been a lot of questions as to whether or not mortgage companies are still lending money. Long Mortgage is lending money and will continue to lend money to our borrowers as we always have. We see the press talking about a “Credit Freeze” or “Credit Crunch” this in no way means that mortgage lending has come to a halt. This simply means that guidelines have tightened to avoid the higher risk loans that have caused much of our economic trouble. Long Mortgage and its partner Wells Fargo have always practiced responsible lending and as a result is now one of the strongest, most resilient banks in the world.
Please don’t make the assumption that there may not be money or loan programs available for your client. Long Mortgage is still providing all types of loans.
Thought you might enjoy hearing some stories of Loan which have been made in the last week.
Tony Poe of the River Campbell Branch recently closed Jumbo $600,000 cash out refinance. Long Mortgage has access to Wells Fargo’s Private Mortgage Banking that specializes in Jumbo loans and “High End Products”.
Cleve Smith of the Tanque Verde Branch recently closed a 90% LTV interest only conventional loan in 5 days. This loan was turned down by another lender and the borrower was told it couldn’t be done.
Brian York and Heike Shockley or our Sierra Vista Branch approved and closed a client on an FHA loan that was turned down by another lender after being in process for 2 months! Using a local assistance program the borrowers got into the home for less than $1,000 out of pocket.
Bond money is available to combine with FHA financing that can provide up to %100 LTV.(borrowers will be required to pay closing costs) Bond money is limited and on a first come first serve basis, when it’s gone it’s gone. You will need to speak with a Mortgage Consultant to see if your borrower qualifies for this assistance.
Monday, October 20, 2008
Monday, October 13, 2008
Commercial Real Estate Pinched by Wall Street Woes
Commercial Real Estate Pinched by Wall Street Woes
WASHINGTON, September 17, 2008
Activity is slowing in commercial real estate sectors in response to tightening credit and slow economic growth, according to the latest COMMERCIAL REAL ESTATE OUTLOOK* of the National Association of Realtors®.
Lawrence Yun, NAR chief economist, said problems on Wall Street are affecting commercial real estate. “Although capital remains available for residential loans, the credit crunch is pronounced in commercial lending,” he said. “Combined with a slowing economy, the lack of credit is curtailing activity in the commercial real estate sectors. As a result, there’s been a slowdown in the net absorption of space, which is leading to higher vacancies and more modest rent growth.”
Patricia Nooney of St. Louis, chair of the Realtors® Commercial Alliance Committee, said market conditions are complex. “We’re in an unusual situation where transactions are being curtailed not for lack of demand, but for serious challenges in obtaining financing,” she said. “In this environment it’s even more important for anyone needing commercial space to work with a Realtor® who knows the local commercial real estate market and available resources.”
The NAR forecast for four major commercial sectors analyzes quarterly data in the office, industrial, retail and multifamily markets. Historic data were provided by Torto Wheaton Research.
Office Market
This year’s erosion in the job market has slowed demand for office space. “Job cuts since the beginning of the year will bring more vacant office space to the market,” Yun said. “Office rent growth will slow greatly as a result.”
Office vacancy rates are expected to increase to 14.4 percent in the second quarter of 2009 from 12.9 percent in the second quarter of this year. Annual rent growth in the office sector should be 3.2 percent this year before contracting 0.4 percent in 2009; it rose 8.0 percent last year.
Net absorption of office space in 57 markets tracked, which includes the leasing of new space coming on the market as well as space in existing properties, is projected at 14.7 million square feet this year and 10.9 million in 2009, down sharply from 57.3 million square feet last year.
Industrial Market
The economic slowdown has curtailed warehouse demand, although the drop in the dollar continues to favor American goods. “The industrial sector will hold up relatively better on the strength of exports,” Yun said.
Vacancy rates in the industrial sector are likely to rise to 10.8 percent in the second quarter of 2009, up from 9.9 percent in the second quarter of this year. Annual rent growth is forecast at 1.1 percent this year and 1.0 percent in 2009; it rose 3.6 percent last year.
Net absorption of industrial space in 58 markets tracked will probably total a negative 16.7 million square feet this year and then rise to 35.3 million in 2009, compared with 120.3 million last year. A pattern of building to suit specific needs continues, with many obsolete structures remaining on the market.
Retail Market
Spiking food and energy costs have squeezed retail spending. “Sluggish consumer spending over the next 12 to 18 months will force retail rent growth to turn negative in 2009,” Yun said.
Vacancy rates in the retail sector are expected to be 10.4 percent in the second quarter of 2009, up from 9.7 percent in the second quarter of this year. Average retail rent is estimated to grow 1.2 percent in 2008 and then decline by 0.9 percent in 2009, compared with a 3.2 percent increase last year.
Net absorption of retail space in 53 tracked markets should shrink by 2.6 million square feet this year before rising 2.8 million in 2009, down from 11.1 million absorbed last year.
Multifamily Market
The apartment rental market – multifamily housing – remains favorable as many potential first-time home buyers stay on the sidelines. “Apartment rents are expected to rise at respectable pace, partly due to healthy demand for rental units,” Yun said.
Multifamily vacancy rates are projected to rise to 5.9 percent in the second quarter of 2009 from 5.4 percent in the second quarter of this year. Average rent will probably rise 3.9 percent in 2008 and 4.0 percent next year, up from a 3.1 percent increase in 2007.
Multifamily net absorption is forecast at 61,400 units in 59 tracked metro areas this year and 188,200 in 2009 compared with 234,400 last year.
WASHINGTON, September 17, 2008
Activity is slowing in commercial real estate sectors in response to tightening credit and slow economic growth, according to the latest COMMERCIAL REAL ESTATE OUTLOOK* of the National Association of Realtors®.
Lawrence Yun, NAR chief economist, said problems on Wall Street are affecting commercial real estate. “Although capital remains available for residential loans, the credit crunch is pronounced in commercial lending,” he said. “Combined with a slowing economy, the lack of credit is curtailing activity in the commercial real estate sectors. As a result, there’s been a slowdown in the net absorption of space, which is leading to higher vacancies and more modest rent growth.”
Patricia Nooney of St. Louis, chair of the Realtors® Commercial Alliance Committee, said market conditions are complex. “We’re in an unusual situation where transactions are being curtailed not for lack of demand, but for serious challenges in obtaining financing,” she said. “In this environment it’s even more important for anyone needing commercial space to work with a Realtor® who knows the local commercial real estate market and available resources.”
The NAR forecast for four major commercial sectors analyzes quarterly data in the office, industrial, retail and multifamily markets. Historic data were provided by Torto Wheaton Research.
Office Market
This year’s erosion in the job market has slowed demand for office space. “Job cuts since the beginning of the year will bring more vacant office space to the market,” Yun said. “Office rent growth will slow greatly as a result.”
Office vacancy rates are expected to increase to 14.4 percent in the second quarter of 2009 from 12.9 percent in the second quarter of this year. Annual rent growth in the office sector should be 3.2 percent this year before contracting 0.4 percent in 2009; it rose 8.0 percent last year.
Net absorption of office space in 57 markets tracked, which includes the leasing of new space coming on the market as well as space in existing properties, is projected at 14.7 million square feet this year and 10.9 million in 2009, down sharply from 57.3 million square feet last year.
Industrial Market
The economic slowdown has curtailed warehouse demand, although the drop in the dollar continues to favor American goods. “The industrial sector will hold up relatively better on the strength of exports,” Yun said.
Vacancy rates in the industrial sector are likely to rise to 10.8 percent in the second quarter of 2009, up from 9.9 percent in the second quarter of this year. Annual rent growth is forecast at 1.1 percent this year and 1.0 percent in 2009; it rose 3.6 percent last year.
Net absorption of industrial space in 58 markets tracked will probably total a negative 16.7 million square feet this year and then rise to 35.3 million in 2009, compared with 120.3 million last year. A pattern of building to suit specific needs continues, with many obsolete structures remaining on the market.
Retail Market
Spiking food and energy costs have squeezed retail spending. “Sluggish consumer spending over the next 12 to 18 months will force retail rent growth to turn negative in 2009,” Yun said.
Vacancy rates in the retail sector are expected to be 10.4 percent in the second quarter of 2009, up from 9.7 percent in the second quarter of this year. Average retail rent is estimated to grow 1.2 percent in 2008 and then decline by 0.9 percent in 2009, compared with a 3.2 percent increase last year.
Net absorption of retail space in 53 tracked markets should shrink by 2.6 million square feet this year before rising 2.8 million in 2009, down from 11.1 million absorbed last year.
Multifamily Market
The apartment rental market – multifamily housing – remains favorable as many potential first-time home buyers stay on the sidelines. “Apartment rents are expected to rise at respectable pace, partly due to healthy demand for rental units,” Yun said.
Multifamily vacancy rates are projected to rise to 5.9 percent in the second quarter of 2009 from 5.4 percent in the second quarter of this year. Average rent will probably rise 3.9 percent in 2008 and 4.0 percent next year, up from a 3.1 percent increase in 2007.
Multifamily net absorption is forecast at 61,400 units in 59 tracked metro areas this year and 188,200 in 2009 compared with 234,400 last year.
Commercial Lending Status
Many of my clients have recently asked me if commercial lending is frozen. They've heard this from friends and even lenders. This is simply not true in a general sense. People with relatively low credit scores (less than 700) may have difficulty qualifying for affordable financing and can expect to pay more for loans (higher interest rate, larger down payment, etc.) but loans are still available.
A popular loan program (SBA 7A) allowing for just 10% down with interest rates of 6-8%, but requiring 51% or more owner occupying of the space, is more challenging to qualify for, requiring good credit scores and documented evidence of debt service capability (e.g. income to new debt ratio of 1.3 or greater). This helps the underwriter have confidence that your business's net income will pay the loan payments and then some. If a buyer doesn't qualify for an SBA loan, then a conventional loan program is the next alternative to explore. These typically require 25-30% down payment and have higher interest rates of 7-9%.
If a conventional loan is not possible due to finances or credit score, then owner carryback should be explored next. These private loans can be structured however the Seller and Buyer agree. Low down payments are possible as are low interest rates. Typically though the loan will be for a rather short period of time like 5 years, when a balloon payment for the principal balance is due. During that period, it is important for the new owner to save $, clean up credit issues, and seek alternative financing sources. In some cases, the previous owner lienholder may renew or extend the loan if terms (like interest rate) are still favorable in the marketplace.
If your business operates in a sole proprietorship structure, then your business's net income will flow into your personal finances and may become muddied. Lenders typically prefer an LLC structure to keep the business finances separate from your personal. Seek legal or tax council for advice on which is best for you. Also it's good to speak to a lender prior to seeking financing so that you can transition to the ideal structure and have time to generate financial records that are so vital to obtaining loans.
So it's just not true to generalize lending as "frozen". If you are considering purchasing real estate in or around Tucson AZ, contact me and I'll help you determine a reasonable price to offer, and get you plugged in to some excellent commercial lenders to get you pre-qualified for financing. Then we can develop an accurate offer to bid for the property. It continues to be a sound wealth-building strategy to own real estate, operate your business in part of it, and find good tenants to lease the un-used portion to help you pay your note.
Bert Ratia
Long Realty Commercial
BertR.LongRealty.com
(520) 301-0155
Home sales up more than 20% over last year
Local home sales are on the rise as prices keep falling
http://www.azstarnet.com/sn/biz-topheadlines/261681
ARIZONA DAILY STAR
Tucson, Arizona Published: 10.10.2008
Median home prices in Pima County continued to drop in September, and the number of homes sold was up 3.4 percent from August and up nearly 21 percent from September 2007, the Tucson Association of Realtors reported.
The local Realtors group said the sales increase points to a stabilization in the local housing market.
Compared to September 2007 — when the median home price in Pima County was $215,000 — home values have dropped 16 percent. The average sale price in September 2008 was $217,397, down 20 percent.
The association predicted that home prices will begin to rise in 2009.
PIMA COUNTY HOUSING NUMBERS
Annual Sept. 2008 Aug. 2008 Sept. 2007 pct. change
Homes sold 934 903 774 +20.7%*
Median price $180,500 $185,000 $215,000 -16.0%
Average price $217,397 $238,504 $272,396 -20.2%
Pending sales 836 878 989 -15.5%
Active listings 7,858 7,763 9,190 -14.5%
New listings 2,039 1,952 2,497 -18.3%
*Figures rounded to nearest tenth. Source: Tucson Association of Realtors Multiple Listing Service
http://www.azstarnet.com/sn/biz-topheadlines/261681
ARIZONA DAILY STAR
Tucson, Arizona Published: 10.10.2008
Median home prices in Pima County continued to drop in September, and the number of homes sold was up 3.4 percent from August and up nearly 21 percent from September 2007, the Tucson Association of Realtors reported.
The local Realtors group said the sales increase points to a stabilization in the local housing market.
Compared to September 2007 — when the median home price in Pima County was $215,000 — home values have dropped 16 percent. The average sale price in September 2008 was $217,397, down 20 percent.
The association predicted that home prices will begin to rise in 2009.
PIMA COUNTY HOUSING NUMBERS
Annual Sept. 2008 Aug. 2008 Sept. 2007 pct. change
Homes sold 934 903 774 +20.7%*
Median price $180,500 $185,000 $215,000 -16.0%
Average price $217,397 $238,504 $272,396 -20.2%
Pending sales 836 878 989 -15.5%
Active listings 7,858 7,763 9,190 -14.5%
New listings 2,039 1,952 2,497 -18.3%
*Figures rounded to nearest tenth. Source: Tucson Association of Realtors Multiple Listing Service
Monday, July 7, 2008
Sierrita Mountain Shopping Center
I have started a new BLOG for the community around Range Market, 11200 S. Sierrita Mountain Road, Tucson, AZ, to foster discussions on the best usage of 3 x 1 Acre Commercial parcels just south of Range Market that I have listed.
Sierrita Mountain Road & Viking BLOG
Sierrita Mountain Road & Viking BLOG
Vail Business Professionals
Vail Business Professionals
I belong to VBP, Vail Business Professionals, an organization of more than a dozen area professionals who have joined together to actively promote community involvement within Vail, Arizona.
The VBP meets weekly at the Del Lago Golf Course to share ideas and promote mutual business and community interests. Presently, the group includes a wide range of professionals ranging from banking to real estate, and plans to add additional members over the coming weeks and months.
We look forward to coordinating special events and informational forums to discuss residential and commercial development plans - including the city of Tucson's impact on our town's infrastructure. The VBA would also like to serve as a conduit for the residents of Vail - to the city, county, and state politicians and legislature.
This is an exciting time in our community with a great deal being discussed, planned, and developed.
Come join us in helping our community prosper and grow.
We meet at Del Lago Golf Clubhouse the first 4 Wednesdays of every month at 7:15am. Come check us out and see how we can help you better serve the local community.
I belong to VBP, Vail Business Professionals, an organization of more than a dozen area professionals who have joined together to actively promote community involvement within Vail, Arizona.
The VBP meets weekly at the Del Lago Golf Course to share ideas and promote mutual business and community interests. Presently, the group includes a wide range of professionals ranging from banking to real estate, and plans to add additional members over the coming weeks and months.
We look forward to coordinating special events and informational forums to discuss residential and commercial development plans - including the city of Tucson's impact on our town's infrastructure. The VBA would also like to serve as a conduit for the residents of Vail - to the city, county, and state politicians and legislature.
This is an exciting time in our community with a great deal being discussed, planned, and developed.
Come join us in helping our community prosper and grow.
We meet at Del Lago Golf Clubhouse the first 4 Wednesdays of every month at 7:15am. Come check us out and see how we can help you better serve the local community.
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