Real Estate Investment Blogs – Top 10 List

There are hundreds of investment blogs on the internet, many of which are written by industry insiders. Each of these blogs holds some value, whether educational, inspirational, or just simply informational. The following ten real estate (RE) blogs provide its readers with the highest value so that investors can benefit from the experience and insights of some of the webs top finance and investment bloggers. It is my hope that by exposing readers to these valuable blogs they will become smarter investors.

#10. Matrix – Matrix is written by a successful New York City appraiser. Consequently the blog has a focus on home prices and incorporates many graphs and charts. It is full of information and content.

#9. Bubble Meter – Bubble Meter is a blog dedicated to tracking the decline of the U.S. housing market. It is simple yet insightful and informative.

#8. Urban Digs – Although this blog focuses on the Manhattan RE market, Urban Digs still provides valuable insights and in-depth analysis on the macroeconomic state of the housing market.

#7. Real Estate Economy Watch – Real Estate Economy Watch is maintained by a RE economics and information company. The site provides insight, analysis, and information on the housing market.

#6. Marketwi.se – Marketwise contains daily links to RE related articles and videos. Focused on real estate commentary.

#5. NAI Global – NAI Global provides excellent analysis of the global commercial real estate (CRE) economy.

#4. Bigger Pockets – The Bigger Pockets Blog is a comprehensive resource for RE investing. It is written by a team of real estate professionals that contribute their knowledge on subjects ranging from mortgages and lending to weekly housing market summaries.

#3. Llenrock Blog – If you are looking for a good CRE blog, then you should head over to Llenrock Blog. The blog is maintained by employees of the RE advisory firm of the same name. Readers are informed of the latest CRE news via links and videos along with professional commentary and insights.

#2. The Real Estate Bloggers – The Real Estate Bloggers is a very well maintained blog that is easy to read and contains solid analysis of the RE industry.

#1. Mortgage News Daily – Mortgage News Daily is a great source of information for both industry professionals and consumers. MND serves as a leading source of breaking news, information, and expert commentary on the housing industry. MND also provides the most comprehensive coverage of the MBS market with almost hourly updates.

Commercial Loan Modification and Loss Mitigation in Today’s Economy

With the economy perched on the brink of recovery why are we still hearing buzz words like “commercial loss mitigation” and “CRE mods” bouncing around? Why has the FFIEC (Federal Financial Institution Examinations Council) been encouraging it? The answer to both is very simple.

The FFIEC is looking at the economy as a symbiotic relationship between creditors (banks), companies, and consumers. All three work together to support the others. Currently many banks have quite a few CRE (commercial real estate) loans that are not looking to healthy after the long recession. The FFIEC simply does not want the banks to panic and start calling in loans at the first sign of recovery. That could spell disaster. The banks end up with once overvalued property and equipment for defaulted loans. With that the plants and mills close pushing down the value further.

Instead, what the government wants to see happen is this. Audit the commercial loans and keep as many of the alive through restructuring as possible. This gives companies a chance to rebound and pay off the loans. Market forces will take care of bloated companies and what will be left are more efficient companies. It is the same thing the government has been doing in the residential housing market. The bank does not want your house, they want there money and are willing to work with you in order to get it. A bird in the hand is worth two in the bush. Try to think of it in terms of “Economies of Scale”, For once, businesses are following personal finances rather than the other way around. It is hopeful that this new direction will lead to a more robust economy.

With every economic cycle we learn a bit more. There was Reconstruction, the Great Depression, OPEC, the 80’s “spend now, pay later”, the Internet boom. Each of these has taught us more about how our nation’s economy works and the importance of being prudent.

Capital Stack

The capital stack represents the totality of all the different financial components that are a part of and support the capital structure of a project. It has all the financial variables that provide the wherewithal, e.g. acquire a tract of land for development, finance the horizontal and vertical development of a planned unit development (PUD), recapitalizing the structure to accommodate partners buyout, etc. The various capital components occupy different levels of the risk/reward spectrum and require commensurate compensation for their at risk place in the structure as a going concern, in the event of default or projected unrealized returns. The availability of capital is critical to the viability of financing commercial real estate projects. It represents the lifeblood of organic and inorganic growth of property portfolio, ability to capture deal flow and the myriad of financial maneuvers to strengthen a principal’s balance sheet. Capital in its various forms is essential to CRE operation and it is imperative to the robustness of the property’s financial structure. Typically, most real estate transactions are financed with a combination of debt and equity in various permutations.

Senior Debt – is the first debt instrument encumbering a property that has a priority lien senior to subsequent liens in order of recordation. If foreclosure becomes imminent depending on the value of the underlying collateral other liens junior in status can be wiped out if there is not enough equity in the capital structure after the first lien holder is compensated. First mortgages could be considered the foundational capital in the finance structure upon which other capital is added to the mix as required to complete the stack. This capital can comprise the majority of the capital needed to conduct transactions with the addition of sponsor’s equity to fulfill the total amount needed.

Junior Debt – is the second, third or other junior debt instrument encumbering a property junior in lien status, recordation sequence or effected through subordination. Junior liens are considered riskier debt on a property from a lender’s perspective due to the priority of lien and in the event of foreclosure there possibly being inadequate equity remaining in the property which can satisfy debt beyond the first lien holder extinguishing all junior lien holders’ rights. Junior lien holders customarily require a risk premium quantified through higher interest rate and shorter term to justify accepting the inherent higher risk of the loan; the return on investment (ROI) required by junior lien holders has to be higher commensurate with the riskier lien position in the capital structure. Junior debt instruments can possibly raise the Loan To Value (LTV) leveraged on a property through the additional lien applied to the property.

Mezzanine Capital – is a hybrid financial instrument which can function as equity or debt filling a gap in the capital structure of commercial realty occupying a position above senior and sometimes junior debt instruments. Sometimes if there is a deficiency in the cumulative debt financing or a disparity between the equity position of property investors and the collective debt instruments mezzanine capital is used to bridge the gap. This funding is arranged to provide its provider with correspondent risk premium to compensate for level of risk associated with return of principal and unrealized returns. Mezzanine debt unlike senior and junior debt instruments usually is not collateralized against the underlying realty used in the financing when structure as preferred equity and is collateralized against the property when issued as debt and used to raise the Loan To Value (LTV) on the debt financing as junior liens.

Preferred Equity – is equity contribution in which the source receives priority return on their money at an agreed coupon rate before the sponsor gets a promote; a percentage of the profits. This is reflective of the position the preferred equity occupies in the capital structure, associated risks of that position and the correspondent compensation required for occupying that position. This capital fills the gap between sponsors’ equity and other financing, reducing the at risk sponsor’s equity in the project. Using preferred equity in concert with the other components of the capital stack increases leverage and when structured prudently can also increase the Return On Investment (ROI); it represents a viable means of using outside equity in real estate transactions for risk mitigation of capital while giving up some of the upside in the deal.

Sponsor Equity – is the cash contribution, accumulated market value above the other capital structure components for a property or the value in other properties owned by sponsor eligible for cross collateralization, etc. In its simplest form, it is the customary down payment required by lenders from borrowers above the loan amount provided to execute a purchase. Sponsor equity can be built up equity resulting from property appreciate and/or loan principal reduction. This creates equitable value in the property which the sponsor can leverage for portfolio pyramiding, capital improvements, etc. This equity represents the at risk sponsor’s capital that in the event of property depreciation, foreclosure, etc is prone to contraction. Sponsors try to reduce their risk exposure by using the other financial instruments available in the capital structure reducing their cash outlay or equity at stake while simultaneously using leverage to increase the cash on cash yield.

When financing commercial real estate, not all the components of the capital stack are necessarily used. However, they are possible options that may assist the principals in reaching their goals. How the deal is structured depends on the parties involved and their objectives, the financial market and the property. However, maintaining flexibility and being cognizant of the available variables that can be used increases the investors’ tools kit and propensity to be effective in getting deals done.

Commercial Real Estate Cycles

Commercial real estate cycles are influenced by market fundamentals precipitated by the stability of the financial markets, the actual and perceived robustness of the economy, buoyancy of property classes within the sector, etc; this underscores the factors which are instrumental in determining the performance of asset class. However, the viability of individual properties are primarily local market driven influenced by the forces in the microeconomic environment inclusive of supply and demand, zoning ordinances, building codes, entrance or exit of industries, population shifts, etc. However, macroeconomic forces e.g. a war, recession, instability in foreign economic markets, subprime market collapse, etc are influential in determining the stability and resilience of local markets as their effects filter down to the local level.

Fundamental and supplementary factors are:-

Demand for space- is characteristic of tenants’ sentiment in relationship to the performance of their businesses. The level of optimism associated with tenants operating a growing, stabilized or shrinking business drives the demand for expansion, maintaining current occupancy rate or contraction of needed space. The demand for commercial space is a derivative of where the business is in its life cycle and senior management’s governance of a space management system tied to business performance.

Housing Supply – is influenced by macro and microeconomic factors which effectuate the performance of the economic environment, business environment, demand for housing, etc. Consequently, if conditions warrant an increase in construction to satisfy the demand for additional realty to be put online, it will occur in response to the market. Being there is a time delay in the developmental process from concept through project completion an oversupply sometimes results as multiple developers over saturate the market with their respective parcels of real property. This leads to supply exceeding demand and the equation shifting with an imbalance of excess supply in relationship to demand.

Population Characteristics- influence real estate cycles through demographic makeup which are determinants of family structures, disposable income, desired housing, community amenities, etc. Population shifts can affect where are the hot spots for real estate acquisitions and developments and the market prices.

Social Attitudes- determine if markets are pro real estate or anti real estate from a developmental standpoint. Some communities desirous of maintaining their autonomy and historic identity are resistant to the construction of new real estate and even industry, e.g. Home Depot. Conversely, there are communities that embrace progress and create an environment with incentives to attract new development with its resultant taxes for the community.

Tax Issues- the tax laws in place can be instrumental in creating favorable or unfavorable realty estate environments. Tax credits and incentives are attractive to developers if other market factors are supportive of project feasibility.

Business Activities- the performance of the business sector is impactful on the robustness of real property markets and affects realty cycles. The unemployment rate and the general confidence people have in the stability of their industry, employers and the economy determine their propensity to invest in businesses, housing, investment real estate and their ability to quality for funding to secure these purchases and/or the willingness to risk capital.

Supply of Money for Financing- the abundance of available money, interest rates, terms, etc can help to expand or contract the real estate market. Developers, investors, homeowners maybe in the market to develop or buy real estate; the money supply has to be adequate with rates and terms that allow an acceptable return on investment to compensate for the inherent risk associated with all real estate investments.

CRE cycles have factors which occur sequentially and/or simultaneously during the period. Different markets are impacted to various degrees by the factors and their ability to rebound also varies. From an investment perspective, when the market is down and real estate can be acquired at a discount and held until the market recovers, appreciation in value can be captured and/or extracted from the property when the commercial real estate cycle is in an upward trajectory in terms of market value.

Do You Need A Bad Credit Car Loan?

There are not many people in this world who do not get excited by the prospect of buying a new car. This excitement can sometimes be deflated by the whole finance thing. If your credit history is not so good, or basically non existent, then you may need to find a bad credit car loan.

The fact is buying a car for most people is one of the biggest purchases they will ever make. Owning a car is kind of like a right of passage for a lot of people, and definitely a sign of “coming of age” for most teenagers. Let face it, we all need a reliable car to get around, and most of us would rather drive a nice new or late car than an old bomb. But nice new or late model cars are obviously a lot more expensive than old cars, and that means that most of us will require some sort of finance. The problem is that if you have a poor credit history, or have not had time to establish a good credit record, then its going to feel like the whole financial system has it in for you. Unfortunately banks and most financial or lending businesses do not look favorably on people with no or bad credit history’s.

But before you decide to give up, bad credit finance is available, be it a bad credit personal loan, or in the case of buying a car, a bad credit auto loan.

The first choice is always to contact the bank you normally do business with, and always take a bit of time to prepare your case in writing before contacting your bank for an appointment. Make sure you have all the facts about the vehicle you would like to purchase, such as price , model, year, mileage etc. Also do a bit of research on repayment schedules, so that you have some idea of what the down payment and repayments are going to be, and how you intend to meet those repayments. On the subject of approaching your bank, it is a good idea to look respectable, wear some nice clothes and do your hair and in the case of men have a shave before going. Remember the old saying about “first impressions”. Another point to bear in mind, is that quite often the bank will be more inclined to grant you bad credit finance on a newer vehicle, due to it having more value if the bank should need to repossess it.

If your bank turns you down, it is not the end of the line.

There are lenders out there who specialize in bad credit finance, and who will be able to furnish you with a bad credit car loan. The fact is, some of the bigger motor car dealers would be willing to give you a bad cedit auto loan. When considering bad credit financing, it is advisable to shop around and do your homework, because the interest rates offered can vary quite significantly between the various lenders. A good starting point for researching the various bad credit financing institutions is of course the internet. by doing a few searches, you will come up with many different lenders to research and choose from. From there it is a fairly simple matter of filling out and submitting an application form.

When buying a car, some things to keep in mind may include. If you are planning to buy a used car, get a friendly mechanic to give it a once over. Keep in mind additional costs such as insurance, registration etc. And most importantly, to enjoy the pride and freedom that owning your own car creates.