We recently met with eight local banks ranging in size from small to very large to present a new development opportunity. What we found was an positive attitude on the part of these lenders that they have eliminated much of there toxic assets.  They now need to make new loans in order to make there business model profitable.

That being said it still seems that to get loans with leverage of 75% or above the answer always comes back to some type of SBA loan. Both the 7A and 504 programs are being pushed heavily as both provide the banks with guarantees and reduced risk which in turn creates higher leveraged loans even up to 90% in some cases.

The downside to these loans are high upfront fees 2-3% of the loan amount and rates that are in competitive but not aggressive. Personal guarantees and the strength of the owners is almost a more significant factor these days then the project itself.

If you have put projects on hold because of refinancing now may be the time to revisit them with lenders. You need to take your project to a lot more lenders than in the past in order to find one that will evaluate your project/ownership structure as you would hope but at least the banks are finally interested again.

By Rory Underwood;  runderwood@revelunderwood.com

The anticipated debt downgrade of U.S. debt by S and P occurred after market close last Friday. The result, opposite to what some expected, was no forced selling of U.S. treasuries (the opposite occurred) and renewed potential for an increased period of low interest rates. As of right now, the 10 year treasury yield is 2.080%, down from 2.600% exactly one week ago. Investor psychology is having far more of an impact on the markets than actual fundamentals right now and, until this changes, any major rate increase in the short term isn’t a risk.  (Piedmont Capital Market Update Email, August 10th, 2011)

1. “Between” – a range of prices always ends up on lower end.
2. “We’re Close” – gives impression more interested in getting done than negotiating.
3. “Why don’t you throw out a number” – surprisingly the initial number quoted is where final number usually ends up closest to so contrary to popular belief going first is an advantage.
4. “I’m the final decision maker” – always leave room that someone else needs to be consulted before decision is made.
5. “Scr…You” – don’t negotiate from emotion stay calm and don’t take it personally.

Good Luck!  (Inc Magazine)

Appraisals - in todays market appraisers are more conservative than ever and are having difficult times finding comparables for projects. This has a huge effect on refinances, purchases and sales. As owner you or your representatives need to be proactive in this process. Lenders usually will provide you at least three choices of appraisers try to educate yourself to their track record or get references. Once an appraiser is selected try to provide them as much favorable information that not only helps your case but makes their job easier. To often owners just let the appraisers go with no input and once the appraisal is done their is no chance to state your case. We saw two appraisals on same residential development that were over $1m different!!