Commercial Investment Real Estate September/October 2013 - Page 17

mercial real estate, while still putting them- selves in a position to build equity and long- term wealth. Of en, these loans do not take much more time than a conventional loan and they are fully amortizing (up to 25 years), with no balloons or call features. T ese loans may also include money for improvements and equipment, as well as working capital, so borrowers can satisfy more than just the real estate need of the business. While interest rates are ticking up, they will likely stay at relatively lower levels as compared with prerecession rates. However, this should motivate small-business own- ers to act soon since rates will eventually increase to more normal, higher levels. With the general economy continuing to recover, small-business owners’ confidence should grow with their sales levels. Investing in hard assets such as commercial real estate will assist them in gaining control of their busi- ness’s occupancy costs. Since we are at some of the lowest real estate value levels in years, there’s a window of opportunity to purchase real estate at this time, as these values will start to rise as the economy continues to improve. In addition, inf ation may be around the corner, so having control of their real estate expense gives small-business owners much greater control over expenses going forward. Targeting Ready Buyers Small-business owners f t the prof le for one of the most financeable deal types today: owner-occupied, general-purpose properties in of ce, retail, or industrial; with loan amounts from $500,000 to $3 million. T is target is the most attractive asset class for lenders. Banks are eager to lend in this asset class and within these targeted loan amounts. Commercial bro- kers and sales agents who focus on this target market should increase their sales commissions. What not to focus on are commercial investment property loans with no national tenants, shorter term leases, loan amounts less than $3 million, in areas with popula- tions less than 50,000. T is continues to be the no man’s land in commercial real estate f nancing. Many of these loan requests have sat dormant since 2007. It’s unfortunate for the o wners, but the market reality dictates lending options. You may f nd a local bank or two that will be interested in a stronger ver- sion of the investment loan that is described above, but you are not going to have a robust pool of lenders to work with to ensure a suc- cessful closing. Focusing on what is easy to f nance puts commercial practitioners in the position to make a higher percentage of overall commis- sion income for the foreseeable future and earn a piece of the recovery. Jeff Rauth is vice president and business devel- opment offi cer for Titan Bank, a national PLP, SBA lender. Contact him at jrauth@titanbank. com. Join CCIM members around the country CARING IN as they take one day to make a difference Y T I M in their communities. CCIM Chapters UN and individual CCIM members will take one day from September 9 - September 22, 2013, to volunteer for a local cause in the 2nd Annual Community Caring in Motion. Make the difference C CIM CCIM.com Visit volunteer.ccim.com for more information. September | October | 2013 15