From "Extend & Pretend" to "Re-fi & Buy"
From “Extend & Pretend” to “Re-fi & Buy”
By: Nicholas A. Dunlap, CPM
If late 2009 through 2010 marked the “Extend & Pretend” era of commercial real estate financing, then 2011 marks the dawning of a new era. As I see it, 2011 marks the beginning of the “Re-fi & Buy” era of commercial real estate. Veteran CRE owners and operators are utilizing low interest rates and equity buildup to acquire additional properties (at significant discounts), while locking in low rate, long term financing both on the acquisition and debt repositioning side of the transaction.
Not only do favorable rates help generate competition amongst investors in terms of price, financing and escrow terms, it further decreases the already minimal response time to acquire discounted assets in select primary markets. Align yourself with astute, like-minded investors to maximize your returns.
Currently, 10 year rates are in the 5.85% range. Say you own a 16 unit building in Orange that you bought for $100K per door in 1998. All two bedrooms with garages, today that property is worth approximately $160K per door. Based on the purchase/market price, that is almost $1,000,000 in untapped equity. Barring any necessary capital improvement projects and assuming a solid in-place cash flow, you can pull out equity to acquire additional investments and still cash flow.
If this is you, we should talk!
I can help you increase your portfolio to include pride of ownership, positive cash flow group real estate investments. Email me at: email@example.com .
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