US Economy Grew 4.2% Second Quarter Of 2018

US Economy Grew 4.2% Second Quarter Of 2018

The U.S. economy grew at a robust annual rate of 4.2 percent in the second quarter, the best performance in nearly four years.

The performance of the gross domestic product, the country’s total output of goods and services, was unchanged from an estimate the Commerce Department made last month, the government reported Thursday.

The strong GDP performance has been cited by Trump as proof that his economic program is working.

“We’re doing much better than anybody thought possible,” Trump said at a Wednesday news conference.

Hard Money Commercial Loans Can Be Your Secret to Success

Hard Money Commercial Loans Can Be Your Secret to Success

The compliance costs associated with the Dodd-Frank Act, the Patriot Act, the Federal Reserve’s Comprehensive Capital Analysis and Review and other regulatory constraints are high.

Those costs, combined with the longest stretch of low interest rates in modern history and overheated real estate markets, have made it more difficult than ever for traditional banks to lend to real estate investors, developers and small-business borrowers.

Additionally, banks — the traditional source of construction capital — in many parts of the country are offering smaller loans compared to the cost of development, when they offer to lend at all. As a result, literally hundreds of alternative lenders have rushed into the market to provide financing options for the borrowers left behind by traditional banks.

Winston Rowe and Associates serves an intermediary for alternative lenders, you can benefit tremendously from this shortfall in bank-financed deals by offering borrowers a quicker time to fund, with fewer constraints. According to a recent Wall Street Journal article, private lending has more than doubled in size over the last decade, surpassing the growth of public stocks and bonds. In addition, since 2016, the U.S. Small Business Administration (SBA) estimates that 80 percent of small-business loan applications have been rejected, leaving plenty of space in the market for alternative lenders to play a major role.

Alternative lending options (which include private lenders, online lenders, crowdfunding and peer-to-peer lending) have increased dramatically since the Great Recession. As a mortgage originator, finding ways to effectively tap into this expanding source of financing can help to bring plenty of new business opportunities your way in an increasingly competitive market.

Speedy decisions

Because alternative lenders are not subject to many of the regulatory mandates that banks face, they can deliver many valuable features not generally offered by banks. For brokers, advertising the many value-add opportunities available through these alternative financing sources will help entice borrowers in need.

Speed is among the perks typically available through alternative lenders. Generally, you can expect a fast “yes” or “no” decision on your loan application. Most private lenders have small loan committees, typically two or three members who meet several times a week. This means, in many cases, a loan decision can be made within 48 to 72 hours. What borrower doesn’t want a fast response to a request for financing?

Once a private lender decides it is interested in making a loan to a prospective borrower, the lender can generally issue a term sheet within a week or two. Banks can take months to decide whether or not they are even interested in making the loan in the first place. That can be a lifetime for a small business.

In addition, many private lenders have cash on hand that is available to be quickly deployed for a borrower’s immediate use — if all of the required due-diligence materials for underwriting are available without delay in an accurate and organized digital format. Speed is one of an alternative lender’s biggest assets. As a rule, it is the borrower who impedes the process by not being sufficiently ready and organized with the materials the alternative lender’s underwriting team needs to conduct due diligence, which significantly increases the time frame for transferring capital to the borrower.

Less red tape

If a bank is offering 60 percent loan-to-value (LTV) financing, chances are that a private alternative lender is likely going to be offering 70 percent and up to 90 percent LTV. This advantage to the borrower in having less skin in the game can be enticing, because it enables them to do more with their own capital.

Traditional banks also can be very particular about a borrower’s credit score, time in business, cash flow status and/or expertise in the business or real estate development for which funds are being sought. Those items are far less relevant to many private alternative lenders, which determine the level of perceived risk they’re willing to accept by understanding the value of the collateral that will protect them in the event of a default.

Because banks are heavily encumbered by numerous restrictions and regulations, substantially more is required of their borrowers — such as proving they are hitting sales numbers, keeping margins at a certain rate and that they haven’t lost any key customers. Private alternative lenders generally demand substantially less from borrowers and are simpler to deal with — from the perspectives of reporting, financial ratios, insurance requirements, equipment maintenance, permitted business lines and client concentrations.

Path to growth

Lending decisions made by traditional banks are often constrained by regulations, such as the Dodd-Frank Act, which stipulates that banks should not concentrate too much capital in loans in any particular asset class, for example. Private alternative lenders generally face far fewer restrictions and can lend as much capital as they wish across multiple industry sectors, such as multifamily real estate, the aviation industry or single-customer businesses.

Unlike traditional lenders, alternative lenders do not require a borrower to open a bank account with them or to fund that account with a certain dollar amount. Alternative lenders also may not have a bricks-and-mortar presence in the towns, cities and states where they make loans. In addition, alternative lenders can determine their own schedule for when and how a loan is repaid, which can reduce the monthly payment required for payback.

Along with generally being easier to work with than traditional banks, as well as providing borrowers with better loan-to-value ratios, alternative lenders also are cheaper in the long run than taking on an additional partner or investor. Who wants to give up ownership when they can avoid it?

These financing perks represent just a few of the benefits that alternative lending offers borrowers and the mortgage broker competing for that borrower’s business. Many borrowers aren’t in a position to get a bank loan, but they may well be perfect candidates for an alternative lender. What broker isn’t interested in exploring that opportunity? Best of all, traditional banks, in some cases, will help you pursue that opportunity as a broker.

When unable to initiate a loan internally, bankers still want to see their small-business borrowers successfully attain the capital they need to grow. By forming relationships with bankers, commercial mortgage brokers can find a healthy flow of lending leads as these situations develop. Prove that you can make bankers look like superstars to their customers by finding them financing, even if it’s through alternative lenders, and you’ll reap great benefits.

Tech Solutions Every Multifamily Investor Should Know

Tech Solutions Every Multifamily Investor Should Know

Remember the days where finding and closing on a real estate deal averaged month? We’re pleased those days are long gone. Technology supplies small and large multifamily investors with the tools to speed up the acquisition, management, and disposition processes.

Choosing the right tool could mean the difference between closing in days or weeks, tenant retention or high turnover, and a low or high net operating income. The following six multifamily technology providers can play an important part in maximizing your investment.

Find a Multifamily Investment Property: LoopNet.Com

Searching for a multifamily investment property? Try the comprehensive commercial property marketplace LoopNet. Search over 800,000 commercial listings, 1.6 million sales comps, and 25 million property records. Their search engine narrows result by multifamily properties for sale in your area, helping investors find apartment buildings, duplexes, triplexes, and other multifamily dwellings. LoopNet is available as a mobile search app. When you are ready to sell your multifamily property, return to LoopNet.

Gather Data Intelligence: redIQ

RedIQ combines data analytics and visualization tools to help multifamily investors better evaluate investment decisions. The platform reduces the time required in capturing rent roll and operating statements, standardizing the data, and analyzing the trends and outliers. Easily compare the property’s performance against comparable properties. RedIQ is designed to eliminate manual data entry and generate a faster turnaround for the multifamily industry.

Monitor Project Progress: Honest Buildings

A leader in project management and procurement, Honest Buildings helps multifamily owners and investors track a project’s budget and timeline to completion. Asset management and construction teams use the features to collaboratively track costs, compare bids, and analyze data for better decisions. Honest Buildings’ platform automates administrative actions while keeping all parties up-to-date on progress. Project data is accessible from any device, desktop or mobile.

Manage the Property: RealPage

RealPage is an expansive suite of integrated property management, asset optimization, investment management, resident services, and leasing solutions. Their tools automate billing processes and aim to boost net operating income across the board. The facilities app integrates with OneSite Leasing & Rents. Residents can request service 24/7. Resident Technology Services assists with establishing technology infrastructure like high-speed Internet access and Internet of Things (IoT) amenities.

RealPage’s Asset and Investment Management (AIM) services streamline all the functions necessary to manage your multifamily portfolio. Their scalable real estate investment accounting service simplifies capital transactions, financial statements, and measures profit center performance. The RealPage Portfolio Asset Management (PAM) marries data and metrics for better decision-making. Analyze financial operating data in easy-to-read dashboards. Understand a property’s performance and its trends. The PAM works with any property accounting system already in place.

Optimize Your Multifamily Portfolio: Rentlytics

Understanding property performance data once required a lot of labor and manpower to analyze multiple spreadsheets. Rentlytics simplifies how multifamily real estate investors and managers analyze property and portfolio data. All information on delinquency, financial history, budget variance, occupancy, and rents is compiled into an easy-to-understand dashboard. The automated process helps multifamily investors identify and predict trends.

Marketing Solutions: RentPath

RentPath simplifies digital marketing solutions, helping find the right renters for the right property. Their marketing network includes Apartment Guide,, and Marketing combination packages include listing the property on top rental websites, high definition photoshoots, reports and analytics, easy updates, and lead capture forms. Monitor prospect calls with call recording to screen applicants. Leverage certified resident ratings and reviews to boost your property’s reputation. Mobile-optimized websites are available, and additional features vary according to the RentPath marketing package.

Property Management Issues For Portfolio Managers

Property Management Issues For Portfolio Managers

One of the biggest issue’s managers of large property holdings encounter is the lack of a clear line-of-sight into the assets within their property portfolio. This lack of clarity can affect anyone from individual investors with a handful of properties in their portfolio, all the way up to institutional owners such as Fannie Mae and Ameritrust.

Owners of portfolios of properties often do not have an up-to-date status of the equipment on their properties, and this makes it difficult to plan and prioritize for their upkeep and repair.

In turn, poorly planned repair and replacement jobs on “behind-the-wall” assets such as HVAC systems, electrical systems, and plumbing can lead to bloated maintenance expenses. However, these can be pared down with asset tracking and planned replacements. Performing planned replacements during the lower-cost offseason, rather than performing expensive emergency repairs during the peak heating or cooling seasons, can make all the difference.

Asset tagging or tracking—the logging of age, model, and warranty status of services—helps owners know what systems are most likely to fail and then plan their budgets accordingly.

An asset-tagging project typically involves a contractor or technician going into a property and labeling existing behind-the-wall assets with a unique identifier, which can then be scanned and logged by the technician via a mobile application.

To use HVAC as an example, once asset data is gathered on all properties of a portfolio, a 360 profile is built showing the brands of the equipment, efficiency/SEER ratings, tonnage, the types of refrigerant used, and the condition of the equipment. Once the data is collected, a report is generated that shows the overall health of a given property and the portfolio as a whole.

Additionally, the technology can be merged with home automation solutions such as smart thermostats to provide additional benefits such as remote monitoring of an entire portfolio of properties, managing heating, and cooling efficiency.

With this asset report in hand, the property owner or investor then is able to optimize their capital expenditure with planned replacements, avoiding both fluctuations in HVAC equipment prices and labor costs.

Managing Out Of State Rentals

Owning a rental property can be a lucrative business. There’s a lot of potential for landlords to generate passive income by renting out homes. Real estate isn’t all passive, though.

Property owners should be checking in on their rental properties on a regular basis to ensure tenants are taking care of the home and that everything is in good working order.

It’s not a hopeless situation, though. Here are five simple tips the pros use to keep tabs on long-distance properties:

Use online landlord software to streamline management.

You know the saying: “There’s an app for that.” Online landlord software allows you to handle the process of screening tenants and accepting payments electronically and remotely, all from one central location. We could all use a little streamlining in our life and business, and property management software is a great example of this type of technology.

Install smart locks to boost security.

Smart locks allow for keyless entry, eliminating the hassle associated with creating or replacing lost keys. Better yet, the keys can’t be reproduced or transferred without your permission. You can even control who has access to the home from your smartphone, so when a tenant moves out, it’s easy to deactivate their access and grant it to the new tenant. This saves both time and money when having locks replaced.

Stay involved with neighborhood home owners associations.

Establish regular communication with the board and check in with them often to make sure your property meets any HOA requirements. They’ll be more than happy to let you know if something looks amiss so that you can address it quickly.

Plan occasional trips for inspections and showings.

You’ll still have to make physical trips to see your property every so often. In these instances, try to coordinate with your tenants so that you can hit all your area properties in one trip.

Keeping up with your rental properties is critical to success in real estate, but it doesn’t have to be a daunting task. Armed with these tips, you’ll be off to a great start with turning your out-of-state property into a source of consistent income.

5 Types of REITs and How to Invest in Them Winston Rowe And Associates

REITs and How to Invest in Them

Real estate investment trusts (REITs) are a key consideration when constructing any equity or fixed-income portfolio. They provide greater diversification, potentially higher total returns and/or lower overall risk.

In short, their ability to generate dividend income along with capital appreciation make them an excellent counterbalance to stocks, bonds and cash.

REITs generally own and/or manage income-producing commercial real estate, whether it’s the properties themselves or the mortgages on those properties. You can invest in the companies individually or through an exchange-traded fund or mutual fund. There are many types of REITs available. Here we look at a few of the main ones and their historical returns. By the end of this article you should have a better idea when and what to buy.

Historical Returns of REITs

Real estate investment trusts are historically one of the best-performing asset classes available. The FTSE NAREIT Equity REIT Index is what most investors use to gauge the performance of the U.S. real estate market.

Between 1990 and 2010, the index’s average annual return was 9.9%, second only to mid-cap stocks, which averaged 10.3% per year over the same period. In comparison, fixed income assets managed 7% annual returns and commodities just 4.5% a year. Real estate was the worst performer of eight asset classes in just two years out of 20. Fixed income, on the other hand, was the worst performer six times in the same 20-year period.

More recently, the three-year average for REITs between March 2013 and March 2016 was in line with the averages in the 20 year period, clocking in at 9.85% over that time. Historically, investors looking for yield have done better investing in real estate than fixed income, the traditional asset class for this purpose. A carefully constructed portfolio should consider both.

Retail REITs

Approximately 24% of REIT investments are in shopping malls and freestanding retail. This represents the single biggest investment by type in America. Whatever shopping center you frequent, it’s likely owned by an REIT. When considering an investment in retail real estate, one first needs to examine the retail industry itself. Is it financially healthy at present and what is the outlook for the future?

It’s important to remember that retail REITs make money from the rent they charge tenants. If retailers are experiencing cash flow problems due to poor sales, it’s possible they could delay or even default on those monthly payments, eventually being forced into bankruptcy. At that point, a new tenant needs to be found, which is never easy. Therefore, it’s crucial that you invest in REITs with the strongest anchor tenants possible. These include grocery and home improvement stores.

Once you’ve made your industry assessment, your focus should turn to the REITs themselves. Like any investment, it’s important that they have good profits, strong balance sheets and as little debt as possible, especially the short-term kind. In a poor economy, retail REITs with significant cash positions will be presented with opportunities to buy good real estate at distressed prices. The best-run companies will take advantage of this.

That said, there are longer term concerns for the retail REIT space in that shopping is increasingly shifting online as opposed to the mall model. Owners of space have continued to innovate to fill their space with offices and other non-retail oriented tenants, but the subsector is under pressure.

Residential REITs

These are REITs that own and operate multi-family rental apartment buildings as well as manufactured housing. When looking to invest in this type of REIT, one should consider several factors before jumping in. For instance, the best apartment markets tend to be where home affordability is low relative to the rest of the country. In places like New York and Los Angeles, the high cost of single homes forces more people to rent, which drives up the price landlords can charge each month. As a result, the biggest residential REITs tend to focus on large urban centers.

Within each specific market, investors should look for population and job growth. Generally, when there is a net inflow of people to a city, it’s because jobs are readily available and the economy is growing. A falling vacancy rate coupled with rising rents is a sign that demand is improving. As long as the apartment supply in a particular market remains low and demand continues to rise, residential REITs should do well. As with all companies, those with the strongest balance sheets and the most available capital normally do the best.

Healthcare REITs

Healthcare REITs will be an interesting subsector to watch as Americans age and healthcare costs continue to climb. Healthcare REITs invest in the real estate of hospitals, medical centers, nursing facilities and retirement homes. The success of this real estate is directly tied to the healthcare system. A majority of the operators of these facilities rely on occupancy fees, Medicare and Medicaid reimbursements as well as private pay. As long as the funding of healthcare is a question mark, so are healthcare REITs.

Things you should look for in a healthcare REIT include a diversified group of customers as well as investments in a number of different property types. Focus is good to an extent but so is spreading your risk. Generally, an increase in the demand for healthcare services (which should happen with an aging population) is good for healthcare real estate. Therefore, in addition to customer and property-type diversification, look for companies whose healthcare experience is significant, whose balance sheets are strong and whose access to low-cost capital is high.

Office REITs

Office REITs invest in office buildings. They receive rental income from tenants who have usually signed long-term leases. Four questions come to mind for anyone interested in investing in an office REIT

What is the state of the economy and how high is the unemployment rate?

What are vacancy rates like?

How is the area in which the REIT invests doing economically?

How much capital does it have for acquisitions?

Try to find REITs that invest in economic strongholds. It’s better to own a bunch of average buildings in Washington, D.C., than it is to own prime office space in Detroit, for example.

Mortgage REITs

Approximately 10% of REIT investments are in mortgages as opposed to the real estate itself. The best known but not necessarily the greatest investments are Fannie Mae and Freddie Mac, government-sponsored enterprises that buy mortgages on the secondary market.

But just because this type of REIT invests in mortgages instead of equity doesn’t mean it comes without risks. An increase in interest rates would translate into a decrease in mortgage REIT book values, driving stock prices lower.

In addition, mortgage REITs get a considerable amount of their capital through secured and unsecured debt offerings. Should interest rates rise, future financing will be more expensive, reducing the value of a portfolio of loans. In a low-interest rate environment with the prospect of rising rates, most mortgage REITs trade at a discount to net asset value per share. The trick is finding the right one. (Learn more about the effects of interest rates in The Impact Of Interest Rates On Real Estate Investment Trusts.)

The Keys to Assessing Any REIT

I’ve talked about specific types of REITs as well as what to look for when investing in them. However, there are a few things to keep in mind when assessing any REIT. They include the following:

REITs are true total-return investments. They provide high dividend yields along with moderate long-term capital appreciation. Look for companies that have done a good job historically at providing both.

Unlike traditional real estate, many REITs are traded on stock exchanges. You get the diversification real estate provides without being locked in long term. Liquidity matters.

Depreciation tends to overstate an investment’s decline in property value. Thus, instead of using the payout ratio (what dividend investors use) to assess an REIT, look at its funds from operations (FFO) instead. This is defined as net income less the sale of any property in a given year and depreciation. Simply take the dividend per share and divide by the FFO per share. The higher the yield the better.

Strong management makes a difference. Look for companies that have been around for a while or at least possess a management team with loads of experience.

Quality counts. Only invest in REITs with great properties and tenants.

Bottom Line

The federal government made it possible for investors to buy into large-scale commercial real estate projects as far back as 1960. However, only in the last decade have individual investors embraced REITs. Reasons for this include low interest rates, which forced investors to look beyond bonds for income-producing investments, the advent of exchange-traded and mutual funds focusing on real estate and, until the 2007-08 real estate meltdown, an insatiable appetite on the part of Americans to own real estate and other tangible assets. REITs, like every other investment in 2008, suffered greatly. But despite this, they continue to be an excellent addition to any diversified portfolio.



Event- On a seasonally adjusted basis, total nonfarm employment rose by 201,000 in August, according to the US Bureau of Labor Statistics (BLS) in its monthly jobs report. Temporary help services employment rose by 0.3% in August, adding 10,000 jobs, and the temporary penetration rate remained at 2.04%. The national unemployment rate remained at 3.9%.

Background and Analysis- On a year-over-year (y/y) basis (August 2018 over August 2017), total nonfarm employment was up 1.6%, and monthly job gains have averaged approximately 194,000 over the past 12 months. Temporary help employment was up 2.9% y/y, with monthly job gains averaging approximately 7,100 over the past 12 months.

Of the 15 major industry groups, the three that most drove total nonfarm employment growth in August (on a seasonally adjusted basis) include professional services excluding temporary help (+43,000), healthcare and social assistance (+40,700), and construction (+23,000). There were four decliners. After two months of being in the top three, manufacturing declined by 3,000 jobs. The information and government industry groups, which have generally been the two weakest groups over the past year, were weak again this month with declines of 6,000 and 3,000 jobs, respectively. Retail trade, which has been quite volatile this year, was down this month by 5,900 jobs. On a year-over-year basis, natural resources/mining led all industry groups in terms of percentage growth in employment, with 8.1%, followed by construction and transportation/warehousing, with 4.3% and 3.3% growth, respectively.

BLS Revisions- The change in total nonfarm payroll employment for July was revised from +157,000 to +147,000 and the change for June was revised from +248,000 to +208,000. With these revisions, total nonfarm employment gains during the two-month period were 50,000 less than previously reported.

The change in temporary help services employment for July was revised from +27,900 to +10,900 and the change for June was revised from -7,500 to -6,500. With these revisions, temporary help employment growth was lower than previously reported by 16,000 jobs.

Staffing Industry Analysts’ Perspective- Despite the tightening labor market, companies were able to find 201,000 more employees to add last month, and average growth over the past three months has been a steady 185,000. In temporary help, downward revisions to June and July more than offset growth in August. Nevertheless, average growth in temporary help jobs over the past three months is 4,800 (which makes up 2.6% of the increase in total employment, greater than the current temporary penetration rate of 2.0%).

Average hourly earnings has garnered increasing attention as many have been wondering when the tightening labor market would finally yield higher wages. While we don’t want to make too much out of one month, data for the month was quite favorable, with growth of 0.4% in August, and 2.9% year-over-year (up from 2.7% in the prior month). It would make sense to see wage growth gain a bit of traction as it will become increasingly difficult for companies to find workers to meet the demand of an economy expected to remain strong into 2019 at least. The unemployment rate cannot get much lower, leaving additions to the labor force as the other source for new employees. (The labor force declined in August and the average gain over the past three months is only 79,000). As the pool of available new employees diminishes, companies will increasingly need to hire workers who already have jobs, which could accelerate movement from lower-wage service jobs in the leisure/hospitality and retail industry groups into industries such as manufacturing, construction, and natural resources/mining. Along with greater pay within industries, a mix shift from lower-wage to higher-wage industries could also contribute to average wage growth.

Real Estate 101 How Investing In Commercial Real Estate Works

Real Estate 101 How Investing In Commercial Real Estate Works

Commercial real estate is a broad term describing real property used to generate a profit. Examples of commercial real estate include office buildings, industrial property, medical centers, hotels, malls, farmland, apartment buildings, and warehouses.

Historically, investing in commercial real estate as an alternative asset has provided millions of investors with attractive risk-adjusted returns and portfolio diversification. But, many investors still don’t understand how commercial real estate works as an investment vehicle.

There are some key differences between commercial real estate investing and traditional investments such as stocks and bonds. Unlike stocks and bonds traded frequently on a secondary market, real estate is a scarce resource and holds intrinsic value as hard asset. Most often, stocks are purchased for their selling potential rather than their capacity as a source of income, hence the “buy low, sell high” heuristic of the stock market.

The investment strategy for commercial real estate is simple: there is inherent demand for real estate in a given area. Investors purchase the property and make money in two ways: first, by leasing the property and charging tenants rent in exchange for use of the property; and second by appreciation in the value of the property over time. Let’s examine these two aspects of the investment opportunities a little more closely: ​

Rental Income

Rental Property Commercial Real Estate Investment

Tenants differ across all types of commercial real estate investment properties. With different tenants comes different arrangements, property management needs, and lease agreements. Here are a few examples:

Office: Cubicles and parking decks. Example tenants would be a law firm or start-up company. The company pays the rent, and has lease terms often in the five-year to ten -year range.

Apartment Buildings: Multi-family apartment buildings typically have individuals or families as tenants. Leases can be short term or long term, but most are not for longer than a year, and some can even be month to month. This building can have more tenants and leases to manage, and more payments to account for each month.

Industrial: Warehouses and smokestacks. A typical tenant might be a manufacturing or distribution company. These properties aren’t generally located in areas that would be very desirable for a residential or retail property. Lease lengths are typically for five years or more.

Appreciation and Value Add

Appreciate Value Added Commercial Real Estate Investment

The second opportunity for potential returns from a commercial real estate investment comes from an increase in the property’s value over the period that the investor holds it. Properties can also lose value, and even the most disciplined, proven investment strategies can’t ensure gains due to outside economic forces that may arise.

In general, real estate is a unique and scarce asset class. More land can’t simply be “created.” In the middle of a major city, this scarcity is increased by demand. If demand increases for your property, or in the area right around your property, there’s a good chance that tenants will be willing to pay higher rent, and prospective buyers will be willing to pay a higher price than you paid originally to take it off your hands.

Appreciation through demand isn’t the only way the value of a property increases. Many investors take an active “value-add” approach to commercial real estate, making improvements to the property to increase its intrinsic value or its ability to earn income. One example of this would be updating cosmetic details or appliances of a multi-family apartment building. Updates such as these can allow the owner to charge higher rent for nicer apartments. Methods outside of improving the property might include rezoning an adjacent parcel of land, say from residential to multi-family, so that more apartments can be built. Any money spent to renovating a building can potentially boost the selling price of the building in the future.

Real World Example: Doug’s Apartment Building

Let’s look at a commercial real estate investment in action. Doug buys an old, 40-unit apartment building in Philadelphia for $5 million. He earns a rental income of $500,000 in year one after all of his expenses. As with all properties, some tenants leave each year. Doug renovates vacant apartments before releasing them out at higher rates to new tenants. Doug’s improvements increase the property’s rental income by $50,000 each year for five years, so by the end of year five the property earns $750,000 per year.

Commercial Real Estate Investment Example

Doug then decides to sell the apartment building for $16 million. The buyer was willing to pay a higher price than Doug did 5 years ago for two reasons: First, Doug renovated the apartments, which now bring in 50% more income than they did when he bought the building. Second, economic growth in Doug’s city increased property values as new renters and entertainment venues moved into the neighborhood. Nice job, Doug!

The Bottom Line

Unlike stocks, commercial real estate investments often provide stable cash flows in the form of rental income.

Commercial real estate is a hard asset that is also a scarce resource. It always has intrinsic value, and usually appreciates in value over time.

The value of commercial real estate is derived by the larger growth of the economy as a whole.

Historically, direct commercial real estate investment has been out of reach for the everyday investor. This is because investments in commercial real estate are typically dominated by institutional investors as projects require millions of dollars in capital and a deep reservoir of expertise for improving and operating a property.

Real Estate Finance and Investment

Real Estate Finance and Investment

That’s what people like about real estate: it moves slowly and is not that affected by the daily swings in the markets. Long-term trends can—and will—affect real estate positively or negatively, but despite raucous political and economic news, real estate just continues to offer a safe harbor for clients.

Real estate investment products can offer superior risk-adjusted returns. Lower volatility is another advantage. Given generally low, or even negative, correlations with stocks and bonds, real estate also can also provide diversification.

Market conditions for real estate are positive from a supply-and-demand standpoint; the fundamentals remain positive; and in many ways markets keep improving.

Growth in the U.S. economy is strong, slow and steady, putting up solid quarterly GDP numbers. Unemployment is at historic lows and consumer spending continues to rise. Those factors are very positive for real estate overall, specifically for industrial, multifamily and office.

Supply-and-demand metrics remain key. New supply is historically low, yet people who aren’t in the industry may look around many cities and say, “There are a ton of construction cranes on the skyline and people are building all over the place.” The fact remains that deliveries of new properties are way below historical averages, in all property types. Demand far outpaces supply.

The U.S. Federal Reserve has already increased interest rates four times. Real estate has been largely unaffected. The industry is more impacted by labor and building materials’ costs. Those have ticked up but not necessarily because of inflation, and building continues.

New property development profitability projections remain in the mid-20s. If that ever falls below 20 or 15 percent, it could turn off development. Nothing near that level looms, even a few years out.

However, if inflation does continue to creep up (in conjunction with growing GDP, which is happening now), it could bode well for real estate: rents often rise as demand for space persists. With inflation hedges built in, real estate also can provide steady income potential, in different market climates.

Tenants—in apartments, industrial, offices or retail—are absorbing what new supply is being delivered. In retail, little new supply is being delivered by nature of what is happening, namely the e-commerce revolution; but in the industrial sector, properties cannot be built fast enough to meet mounting demand.

4 Types of Multifamily Financing: Rates, Terms & Qualifications Winston Rowe and Associates

4 Types of Multifamily Financing: Rates, Terms & Qualifications Winston Rowe and Associates

Multifamily financing is a mortgage used for the purchase or refinancing of smaller multifamily properties that have two to four units and large apartment buildings that have five or more units. Multifamily loans are a good tool for both first-time real estate investors and seasoned professionals. Rates are generally between 4.5 percent and 12 percent with terms up to 35 years.

  1. Conventional Mortgage for Multifamily Properties

Conventional mortgages for buying a multifamily home are permanent “conforming” loans offered by traditional banks and lending institutions. These mortgages have terms of 15 to 30 years and can finance multifamily properties between two and four units but can’t finance apartment buildings with five or more units. Conventional mortgages are conforming because they typically adhere to Fannie Mae’s required qualifications and maximum loan amounts. However, they aren’t backed by the federal government.

Conventional mortgages for multifamily homes are right for investors who want a long loan term. They’re right for investors who purchase a multifamily property that has already been rehabbed. They’re also right for investors who already have a banking relationship with a financial institution that offers multifamily loans.

Multifamily Conventional Mortgage Loan Amounts

Conventional multifamily loan amount and down payment are:

Two-unit property: $533,800 to $800,755

Three-unit property: $645,300 to $967,950

Four-unit property: $801,950 to $1,202,925

LTV: Up to 80 percent

Down payment: 20 percent or more

Keep in mind that these maximum loan amounts are regional and higher cost areas like Hawaii have higher maximum loan limits. An investor’s typical down payment with a conventional multifamily loan is 20 percent or more of the property’s purchase price. This is fairly standard when compared to more traditional residential property loans.

Conventional multifamily mortgage costs are generally:

Rates: 4.5 percent to 6.5 percent

Loan origination fees: 0 percent to 3 percent

Closing costs: 2 percent to 5 percent

The rates found on a conventional mortgage can be either fixed or variable. Fixed rates are fully amortized throughout the loan’s term while variable rates typically reset after a seven- to 10-year period. Variable interest rates are based on the six-month stated Intercontinental Exchange London Interbank offered rate (LIBOR), and there is usually a cap equal to the starting interest rate plus 5 percent to 6 percent.

You might also be charged a minimum $500 appraisal fee as well as an application fee that’s typically around $100 to $200. The application fee will sometimes cover the appraisal. Loan origination fees and closing costs are typically taken directly out of the loan.

Conventional multifamily mortgage terms are generally:

Term: 15 to 30 years

Funding time: 30 to 45 days

Conventional Multifamily Mortgage Loan Requirements

Conventional multifamily loan qualifications are generally:

Units: 2 to 4

Credit score: 680 or more (check your credit score for free here)

DSCR: 1.25 or higher, which is the amount of cash flow available to cover debt payments

Cash reserves: 6 to 12 months

If you have a property with five or more units, you’ll want to look into government-backed multifamily loans and multifamily portfolio loans. Further, conventional mortgages typically don’t finance a rehab or renovation project. Therefore, the second qualification you need to mind is that all multifamily properties have to be in good condition prior to financing.

  1. Government-backed Multifamily Financing

Government-backed multifamily financing is multifamily loans sponsored by Fannie Mae and Freddie Mac as well as the Federal Housing Administration (FHA). There are more than five government-backed multifamily financing options, which can either finance properties with two to four units or properties with five or more units.

Government-backed multifamily loans are right for investors who want to live in one of the units and rent out the other units. Investors who only have a small down payment can also benefit from government-backed multifamily loans. They’re also right for larger investors who want to purchase a five or more unit property with an FHA multifamily loan.

Government-backed loan amount and down payments are generally:

Two-unit property: $533,800 to $800,755

Three-unit property: $645,300 to $967,950

Four-unit property: $801,950 to $1,202,925

LTV: Up to 80 percent

Down payment: 3.5 percent or more

Government-backed loans have the following loan amounts:

Fannie Mae: $750,000 to $3 million or more

Freddie Mac: $1 million to $6 million or more

The FHA offers multifamily loans for properties with five or more units. The minimum loan amount is $1 million and there is no maximum amount. However, the FHA 223(f) apartment loan can finance up to 87 percent of a property’s LTV, meaning that the down payment would only be 13 percent or more of the purchase price.

Government-backed multifamily loan rates include:

Rate: 5 percent to 7 percent or higher

Loan origination fees: 0 percent to 1 percent

Closing costs: 2 percent to 5 percent

Prepayment penalty: 1 percent

These costs are usually taken directly out of the loan and aren’t considered out-of-pocket costs. Fannie Mae and Freddie Mac multifamily loans with longer terms have fixed rates that are fully amortized and shorter-term loans can have fixed or variable rates. FHA rates are fixed over the entire term. Fixed rates are typically amortized over the term of the loan while variable interest rates adjust after three to 10 years based on the current six-month LIBOR rate.

In contrast, FHA 223(f) loan costs are generally:

Loan origination fees: 0 percent to 3 percent

Closing costs: 2 percent to 5 percent

FHA inspection fee: 1 percent or more

Mortgage insurance premium: 1 percent

Legal fees: $10,000 or more

Government-backed Multifamily Financing Terms

The terms for government-backed multifamily loans are:

Term: 5 to 35 years

Funding time: 60 to 180 days

Both Fannie Mae and Freddie Mac multifamily loans have terms between five and 35 years. The time to approval and funding with these multifamily loans can be 60 to 90 days. For FHA-backed multifamily loans, the term can be as long as 35 years. Because there are more regulations and guidelines with FHA loans, the time to approval and funding is longer at 60 to 180 days.

Government-backed Multifamily Mortgage Loan Requirements

The qualifications for government-backed multifamily loans are:

Units: 2 or more

Credit score: 650 to 680 or higher (check your credit score for free here),

DSCR: 1.25 or higher, which is the amount of cash flow available to cover debt payments

Occupancy: 85 percent to 90 percent or more

Liquidity: At least 9 months

Occupancy: At least 3 months

FHA multifamily loan qualifications are:

Units: 5 or more

Credit score: 650 or higher (check your credit score for free here),

DSCR: 1.15 or higher

Occupancy: 95 percent or higher

Liquidity: At least 9 months

Occupancy: At least 6 months

Fannie Mae and Freddie Mac’s multifamily financing options together can fund the purchase of a multifamily property between two and five units or more. Just remember that the conforming loans can finance properties between two and four units while the nonconforming multifamily loans can finance properties of five or more units.

Where to Find Government-backed Multifamily Financing

The Fannie Mae, Freddie Mac and FHA multifamily financing options are originated and offered by government-approved mortgage lenders. For example, the Commercial Real Estate Finance Company of America offers all government-backed multifamily loan options.

  1. Portfolio Loan for Multifamily Properties

A portfolio loan for multifamily properties is a nonconforming loan used to purchase a multifamily property between two and five or more units. Portfolio loans for multifamily properties are permanent mortgages with terms between three and 30 years.

These types of multifamily loans are right for investors who need more flexible multifamily loan requirements. They’re also right for investors who want to finance multiple properties at once because they can finance four to 10 properties simultaneously.

Multifamily portfolio loan amount and down payment are generally:

Minimum loan amount: $100,000 or more

Maximum loan amount: Depends on the lender

LTV: Up to 97 percent

Down payment: 3 percent or more

Portfolio loans for multifamily financing aren’t required to meet Fannie Mae or the other government organization’s requirements for maximum loan amounts and down payments. This means that portfolio loans are more flexible than conforming multifamily loans.

Portfolio multifamily loan rates are generally:

Rates: 5 to 6 percent or higher

Loan origination fees: 0 percent to 3 percent

Closing costs: 2 percent to five percent

Prepayment penalty: 1 percent

These costs are taken directly out of the loan and their interest rates can be either fixed or variable. Like the other multifamily loans, variable interest rates are typically fixed for five to 10 years before adjusting every six months based on the six-month LIBOR rate.

Terms for multifamily portfolio loans are generally:

Term: 3 to 30 years

Funding time: 30 to 45 days

The most common types of portfolio loans for multifamily financing will often have a term of 15 to 30 years. The usual time to approval and funding is between 30 to 45 days.

Portfolio multifamily loan qualifications are generally:

Units: 2 to 5 or more

Credit score: 600 or higher (check your credit score for free here),

DSCR: 1.25 or higher

Occupancy Rate: 90 percent or higher

Liquidity: 9 months or more

Occupancy: 3 months or more

  1. Short-term Multifamily Financing

Short-term multifamily financing is a non-permanent multifamily loan option with terms that range from six to 36 months. These loans include both hard money loans and bridge loans with monthly payments that are usually interest-only.

Short-term multifamily financing loans are right for investors that want to season, renovate or increase the occupancy a multifamily property in order to meet the stricter requirements of a permanent multifamily loan. Furthermore, some investors use these non-permanent options to buy a property and wait until they meet the personal qualifications before refinancing.

Short-term multifamily loan amounts and down payments are generally:

Minimum loan amount: $100,000 percent

Maximum loan amount: Varies by lender

LTV: Up to 90 percent

LTC: Up to 75 percent

Down payment: 10 percent or more

The LTV ratio is based on a multifamily property’s current fair market value and is used to finance properties in good condition. The loan-to-cost (LTC) ratio, on the other hand, is based on the combined costs of purchasing and renovating a multifamily property and is used for properties in poor condition. This means that an investor should expect to cover 10 percent or more of a property’s purchase price or 25 percent or more of a property’s purchase price plus renovation costs.

Rates on short-term multifamily loans are generally:

Hard money loan rates: 7.5 to 12 percent or more

Bridge loan rates: 5 to 12 percent or more

Loan origination fees: 1 percent to 3 percent

Exit fee: 1 percent

Extension fee: 1 percent

Prepayment penalty: 1 percent

These costs are typically taken out of the loan and don’t come out-of-pocket. The interest rates found on short-term multifamily financing options vary widely depending on the type of loan and the lender.

Short term multifamily financing terms are typically:

Term: 6 to 36 months

Funding time: 10 to 45 days

The terms of a non-permanent multifamily financing option are short and typically between six to 36 months. This means that investors will typically either have to flip the property or refinance with a permanent multifamily loan at the end of the term.

However, the time to approval and funding is also short, making it advantageous for investors who need to compete with all-cash buyers. For hard money loans, the typical time to funding is between 10 to 15 days. For bridge loans, the time to funding is between 15 to 45 days.

The qualifications of short-term multifamily financing are generally:

Units: 2 to 5 or more

Credit score: 550 or higher (check your credit score for free here),

Experience: 2 or 3 past rehab projects or multifamily experience

Subordinated debt: None

Typically bridge loan qualifications are:

Units: 2 to 5 or more

Credit score: 640 or higher (check your credit score for free here),

Experience: 2 or 3 past rehab projects or multifamily experience

Subordinated debt: None

Interest reserve: Required for properties below 1.05 debt-service coverage ratio (DSCR)

Where to Find Short Term Multifamily Financing

Hard money lenders like Patch of Land offer 12- to 24-month short-term financing options for two- to four-unit buildings, condominiums, town homes and multifamily apartments. You can borrow up to 85 percent LTV with a max of $3 million. Interest rates start at 8 percent and their application can take minutes.

How Multifamily Financing Works

Multifamily mortgages can finance two types of properties. The first is a residential investment property with two to four units. The second is an apartment building with five or more units. This distinction between the types is important because the number of units dictates the types of multifamily financing options.


For example, conventional mortgages can only finance residential income properties between two to four units. Government-sponsored loans and short-term financing options, on the other hand, can finance both residential income properties as well as apartment buildings with five or more units.

Permanent Multifamily Financing Options

Permanent multifamily mortgages have repayment terms of five to 35 years and have a loan-to-value ratio (LTV) of up to 87 percent. Interest rates range between 4 percent to 6 percent and rates can be fixed or variable. Permanent multifamily mortgages are the most common type of multifamily financing and account for 93 percent of outstanding multifamily loans.

Although permanent loans are generally long term, there are some shorter options. For example, government agencies offer loans that have terms between five to 10 years.

These multi-family loans are right for:

Investors who intend to pay off a multifamily loan within 10 years

Investors who need lower payments at the start of the loan

Investors who want an adjustable rate loan

Investors who want to renovate a multifamily property during a five to 10 year period

On the other hand, long-term permanent multifamily loans have terms between 10 to 35 years. Monthly payments are typically amortized during the entire term. What’s more, interest rates are typically fixed.

Long-term permanent multifamily financing options are right for the following investors:

Temporary Multifamily Financing Options

Temporary (short-term) multifamily loans, such as hard money loans, are mortgages with terms between six and 36 months. Monthly payments are typically interest-only with fixed rates between 4 percent to 12 percent or more. Temporary multifamily financing options are used to purchase, renovate, season or sell a multifamily property before refinancing to a permanent mortgage at a later date.

Theses temporary multifamily loans are right for:

Investors who need to season a multifamily property

Investors who need to increase the occupancy rate of a multifamily property

Investors who may want to renovate a multifamily property

Investors who don’t meet the stricter qualifications of a permanent multifamily loan

Investors who need to compete with all-cash buyers

Overall, investors of multifamily properties should be willing to be active in the management of the property. They should have at least nine months cash reserves not only to cover monthly loan payments through vacancy periods but also to cover unforeseen repairs as needed.


Apartment Building Loans No Upfront Fees Winston Rowe & Associates

Apartment Building Loans No Upfront Fees Winston Rowe & Associates

Real Estate Investing

Winston Rowe & Associates a national no upfront fee apartment loan and financing firm. With direct access to the most aggressive investor sources in the world, they can structure a customized financing solution for clients, with the best terms possible.

Winston Rowe & Associates Capital Deployment Objectives:

No upfront or advance fees
Loan amounts starting from $1,000,000 to $500,000,000
Private or hard money funds available for a quick close
Debt coverage ratios (DSCR) from 1.20 and up
All property types considered
Construction, Bridge, or Permanent Financing
Adjustable Loans, Fixed Loans, or Interest Only Loans
Loan to cost increased with mezzanine financing
Loan to value increased with mezzanine financing

At Winston Rowe & Associates, their primary objective is to provide the most reliable and efficient means of sourcing both debt and equity for your commercial real estate loans. Recognizing that people and relationships drive this business, they are staffed with some of the industry’s most committed professionals.

How To Purchase An Apartment Complex

How To Purchase An Apartment Complex

Buying an apartment complex is a long, sometimes complicated, process. It’s important for you to gather as much information as you can before you make the decision to buy. Applying for a mortgage to finance an apartment complex is not at all similar to applying for a home mortgage. Apartment complexes with four or more units are commercial properties, and loans for them have different underwriting rules.

Types of Properties:

Decide if you want to purchase a residential apartment complex of a mixed-use building. A mixed-use building has a combination of office and residential units, but at least 80% of the space has to be residential. The complex has to have a grade of C+ or higher. This means you can’t rent the units daily or weekly, and the units can’t be single-occupancy, as in a rooming house or motel.

Gather information about the building you would like to buy. You may not be able to get a loan if the building will require excessive maintenance, or if the complex has not had 90% occupancy for the three months immediately preceding your loan application.


Talk to local real estate agents. Get their advice about the location you have in mind. Inquire about the possibilities of future zoning changes or any public works projects that may impact an income producing property. If there are plans for a regional airport to be built a few miles away in the next few years, for example, you might find it difficult to rent out your residential units. Don’t assume that everything will remain static; look at the past history of the location and try to imagine any major changes that could be likely to take place in the future.

Professional Expertise:

Have the building inspected by a professional who has experience inspecting commercial buildings. Make sure the inspection covers every aspect; don’t settle for a standard inspection, which may not include trouble spots, such as a wet basement. Pay extra money if you have to for a thorough inspection that goes above and beyond what is required by mortgage lenders. If the inspection reveals serious flaws, don’t make an offer, or reduce your offer amount by the amount it would cost to make the necessary repairs.

Supporting Documentation:

Assemble the documents you will need for the loan application. Your real estate agent will be able to assist you in this. Most lenders require the following documents, but your lending institution may require more:

The ensuing is a list of supporting documents that are required to process and underwrite (due diligence) your commercial loan request. Additional documents will be required.

Financial Supporting Documents:

The last three (3) years corporate tax returns

The last three (3) years business tax returns

Name and address of corporate bank

Business Profit & Loss 3 Years, For Seller or Buyer

Most recent copy of business bank statement

Personal financial statement for all guarantors

Use of Proceeds In An Excel Format For Cash Out Refinance

Property Supporting Documents:

Schedule of tenants leases

Copies of Tenant Leases

Schedule of Units with Square Foot Per Unit

Schedule of improvements to be made with cost breakdown to subject property

Exterior Photos of Subject Property Photos of Parking Lot, Street view

Interior Photos of Subject Property

Most Recent Appraisal

Copy of the First Page of the Insurance Binder for Refinance

List of All Litigation Past and Present

Guarantor Supporting Documents:

4506 T executed

Tri merge credit report

Government issued photo ID copy – front and back

Personal Financial Statement

Articles of Incorporation

Key Investment Guidelines For Rental SFR Properties

Key Investment Guidelines For Rental SFR Properties 

Whether you’re looking for a conduit, traditional or hard money funding solutions. Winston Rowe and Associates can meet both your individual and professional investment objectives. They have some of the most creative capitalization plans in the market that are designed meet the unique set of financial circumstances of each  transaction.

Choose the right property and you’ll reap the rewards; the wrong one will end up costing you dearly. You can minimize the potential for losses if you remember these four things to look for when evaluating a commercial property.

Property Location. The most important aspect of real estate investing is the location of the property. Properties in prime locations provide investors options such as resale, or rental. Those in poorly performing areas are limited and resale or rental may be difficult. The only way to really know what the area is like is to drive through during the day, at night and on weekends. Take note of activity that may discourage future buyers or renters.

Property Condition.  The condition of the roof, foundation, windows and mechanical components are big ticket items that will greatly affect your budget.  Make sure you have hard cost numbers from your contractor before you take the deal. Don’t be overly concerned by cosmetic issues that are easily fixed. Fresh paint, updated carpet, and flooring are relatively inexpensive.

Asking Price. The determining factor will be what the potential future value of the property is. The listing price is an important part of the equation. You don’t want to invest more than the property is worth, especially if you need to do a large amount of rehab. Look at other comparable properties, same number of bedrooms, square footage, etc., and determine the amount you’re willing to invest. Don’t be surprised, sometimes your offer will be more than the listing price.

After Rehab Value.  When it comes to investing, look at the location, condition, sales price and after rehab value. When all of these things are in line, you’ll be on your way to a profitable deal. The combined total of the asking price, plus rehab costs will bring you to your total expenses. Determine the percentage of profit, or dollar amount, you want to make and evaluate whether your investment will fulfill your needs. If not, you will be wise to move on to the next deal. Evaluating the after rehab value of a property will help you determine whether the deal is one you want to take, or if it’s time to move on. However, this isn’t necessarily the value of the home. Once completed, it’s possible your investment will be worth far more.

When speed and experience are important and crucial to your SFR and multifamily investing success, a principal at Winston Rowe & Associates is always available to speak with prospective clients.

They can be contacted at 248-246-2243 or visit them online at