Who says money doesn’t grow on trees?
22Oct, 2023
INVESTORS: How to avoid financial ruin in CRE deals…
Nearly 65% of investors in CRE do not know when their loans are due. As we navigate through the dynamic economic landscape of today, waiting for the bank to call and renew your loan is too late. With increasing interest rates for longer, understanding and leveraging information in the finance industry becomes more crucial than ever. Our commitment to guiding investors in safeguarding their capital and real estate investments remains unwavering. It’s disheartening to witness the impact of bankruptcy and foreclosures on investors, often resulting from manageable circumstances. To assist you in thriving in the commercial real estate market while avoiding financial pitfalls, here are a few strategies:
- Conduct thorough due diligence on your CRE loans and promissory notes. Many investors overlook the importance of in-depth analysis of their financial instruments. It’s essential to conduct comprehensive research on your portfolio to identify the history of your loans, including previous ownerships and payments. Surprisingly, some loans might be prepaid, which could reveal untapped equity in properties you’re involved with. This equity, once identified, can significantly enhance your investment strategy. Our expertise lies in uncovering these opportunities, providing a unique advantage to our clients.
- Secure your REEIP Trust Claim(s). A significant number of properties are likely eligible for a REEIP (Real Estate Equity and Interest Protection) Trust claim, largely due to overlooked or misunderstood financial transactions by banks. Identifying such scenarios can lead to reclaiming equity lost in previous transactions, essentially recovering value that rightfully belongs to you. This process is directly linked to thorough due diligence and understanding the nuances of your property’s financial history.
- Property Tax Adjustments. As property values begin to decline, especially highly valued commercial real estate, the local assessors office may keep the high valuation on record, thereby keeping your tax bill high. In order to change the valuation, you need to appeal the value with the property assessors office. This doesn’t happen over night, so do not wait until October 31st to begin the paperwork.
- Changing market trends and valuations. In today’s volatile market, it is also vital to keep abreast of changing regulations and market trends that can affect real estate values and investment viability. For instance, understanding the impact of interest rate changes, economic downturns, or legislative shifts can provide investors with a strategic edge, allowing for proactive adjustments to investment strategies. Additionally, leveraging technology and analytics can offer deeper insights into market conditions, property valuations, and investment opportunities, enabling more data-driven decision-making.
- Network of knowledgeable professional. Moreover, building a network of knowledgeable professionals, including real estate agents, attorneys, and financial advisors, can be invaluable. These relationships can provide you with access to insider knowledge, advice on complex legal and financial issues, and opportunities that may not be widely known to the public. Engaging with the community and participating in real estate forums and seminars can also enhance your understanding and strategies within the industry.
- Sell Now and live to invest another day. Finally, selling your commercial real estate portfolio can help mitigate risks associated with market volatility, especially if your loans are due in the next 5 years. Conversely, investing in different types of properties, such as residential, commercial, and industrial, or in various geographic locations, can spread risk and increase the potential for steady returns.
- Sustainable, Energy, and Government. If you need to hold on, now is a great time to invest in SEG programs that will reduce your carbon footprint and will increase the future value for when the commercial real estate market does return. Embracing sustainability and considering environmental impacts when making investment decisions can also appeal to a broader market, potentially increasing property values and attractiveness to tenants and buyers.
The path to success in real estate investment is multifaceted and requires a holistic approach that encompasses market analysis, due diligence, and continuous learning. By adopting these strategies, investors can not only avoid common pitfalls but also position themselves for long-term growth and success in the ever-evolving real estate market.
Investing in commercial real estate is a complex endeavor that requires a blend of knowledge, diligence, and access to the right information and resources. By staying informed about the financial mechanisms at play within the real estate industry, investors can make more informed decisions, navigate challenges more effectively, and unlock new opportunities for growth and stability.
We have seen a few downturns and we are here for you to answer questions, provide guidance and help navigate these unknown and challenging times. Call us at 813-995-9595.
3Feb, 2023
Worries of Stagflation??
Worries of Stagflation? We already know there is inflation. But are we seeing signs of the dreaded stagflation in the economy? Who knows, only a picture in the rear view mirror can tell us. But regardless of the terms we use, businesses are experiencing some turbulent and uncertain times. We are handing you the keys that might help your navigate these challenging times.
We anticipate that for an extended period, revenue may flatline while costs keep increasing. If you have exhausted the cushion you had set aside, it is time to take some other strategic measures to preserve the cashflow.
KEY #1 – Keep the cost of debt to a minimum. And if interest rates are rising, consider replacing any variable interest rates loans with fixed rate interest payments. The fixed rates may feel high now, but if the Feds launch into drastic action, you will be prepared. Conversely, when the interest rates fall again, you can refinance at the lower rates.
KEY #2 – Become a landlord. During stagflation, rents may increase and your business’s revenue might not. If you have extra cash available, consider buying the building in which your business operates, then rent the other half of the building to other tenants. Of course, purchase wisely. There are very friendly loans available to support purchasing commercial real estate for occupancy and rentals. So explore all of your options.
KEY #3 – Be opportunistic about acquisitions. Companies that are going out of business or need to raise cash may sell property or equipment at below market prices. Consider acquiring commercial property, equipment, assets, brand lines or staff with needed skills to augment the business you are operating.
Likewise, consider merging/acquiring a competitor, buying a channel, or manufacturing your product in-house if doing so allows both companies to reduce overhead, expand into new markets or offer an expanded array of products or services.
KEY #4 – Augment staff with technology. Embrace automation in your business can supplement the staff and allow people to do more with less. If you have been resistant to incorporating technology into your daily business routine, you may be missing one of the biggest opportunities for growth in your company and for your staff. Technology can enhance your product output as well as offer a better customer experience. Should you higher staff person, or should you invest in technology that helps everyone grow. Business loans are available to expand your business technology needs and help your business be more cashflow positive.
This is the time to think strategically and put the sound principles into action. This year will be another year of change to stay alive, or you can make it a year of change and leverage the opportunities coming available. Ultimately, its these times that help us grow and expand into places we did not even know existed. Protect the cashflow, manage the cash, and leverage debt where possible.
We are here to find the strategies and the loans that help propel your business forward.
3Jan, 2023
Who should be on my team in 2023?
Who should be on my team in 2023?
There’s no time like the beginning of the year to complete a thorough assessment of your business activities. Where have we been? Where are we now? and Where are we going? Most good business owners take the time to at least think about what the year will bring. And in the wake of uncertainty of the upcoming year given inflation, increasing interest rates, the war overseas, and political turmoil, one of those line item tasks should include asking:
Who do I put on my team professionally?
Take an assessment of the professionals around you. Your attorney, your cpa, your banker, your technology person. Yes, you’ve worked with them for years, but are they serving the purpose you need them to right now? Certainly, you do not want to be in a quandary and then have limited options to choose from. The best time to explore your options is when you are not under a stressful situation.
Who should be on my team in 2023?
The obvious as stated above, but is that all the key management players I need to achieve my big impossible goals this year? Who else should I consider to help my teams perform? More importantly, who are bringing good ideas to the table that lets me choose the next steps for our business? Or takes my business into a new direction?
Think you have it under control? Think again! The world of finance is changing rapidly. You do not have the time nor probably the desire to keep up with the latest and greatest growing financing trends, but there is nothing wrong with exploring some tried-and-true methods and incorporate some well-worn paths to grow your business.
As I have said many times before, cashflow is king. Protecting your business cashflow is the secret to your business success. I can guarantee, that none of those professionals can advise you on protecting your cashflow. They can only speak to managing your money, not generating it. Which is actually different than managing your cashflow. Not having cash-on-hand to make payroll or pay your bills is one of those things that will keep you up at night. Not being prepared for a surprise negative cashflow situation, will take you out of business in an instant.
Of course, turning to the banks, when you need the money; they cannot lend it to you when you are in an adverse financial position. We are already witnessing the banks tightening lending criteria and standards. And if you remember in 2008 crisis, the banks were not your friend. They were often the source of the problem. I am not saying this is 2008 all over again. The current situation is very different and there are some strong fundamentals at play. However, there are some similarities that are worth paying attention to. How does the saying go? The banks only lend money when you don’t need it. There is some truth to that.
And if you find yourself in a quandary, predatory lenders are waiting behind the scenes to scoop up on the opportunity. This is a position you want to avoid. So, if you are planning for a business-as-usual kind of year during your assessment, you may miss the mark. Lets be honest, this is a “Take Action” kind of year, not a wait and see how it goes kind of year. The smart people will make decisive plans and act early in the cycle. They will expand their tolerance limits and plan for the low cashflow possibilities. And they will surround themselves with talented people who can bring creative ideas to the table when navigating a difficult year. You will be brilliant!
At Business Loan Solutions, we are dedicated to your business success. We understand the importance of cashflow in your business and we strive to find the right solutions to keep operations running smoothly, even in this uncertain time. If the saying goes, the banks only lend money when you don’t need it is true, then the opposite is true too. While your business is going well, look for solutions that work for you. Consider a working capital loan or a line of credit as a back up plan. Consider consolidating your loans, especially if you have a long-term loan coming due this year. Take advantage of equipment leasing or invoice factoring to diversify your cashflow possibilities. Or even investigate an SBA loan to expand your business. We have many levers to pull in your favor and we can help you plan this year’s cashflow strategy.
So as we head into an uncertain economic year, who do you want on your team?