To take a page from The Wizard of Oz, we’re not in Kansas any more.
With inflation at a 40-year high and the biggest set of Fed interest rate hikes since 1994, commercial real estate buyers are faced with a daunting set of challenges to navigate the existing landscape.
And they’re not alone.
This perfect storm of inflation pressures and questions about the values of real estate has created significant issues for lenders.
The upshot of all this upheaval: savvy commercial real estate borrowers and brokers need to ask lenders hard questions to ensure they’re not caught in a whirlwind of eleventh-hour lender retrades or lenders incapable of closing deals.
Here’s are the top five questions you should be asking prospective lenders right now.
Question 1: Do you have the capital on-hand to complete deals right now?
Just because a lender is in business doesn’t mean they’re in the position to lend money.
In our past blog, we highlighted that the increasing and volatile interest rate environment has caused many traditional lenders to pause new lending, leading borrowers to seek alternative sources of financing. But even private lenders that take pitches may not have the capital on-hand, or may not have access to critical capital sources to close deals.
A common culprit?
Overleveraging during the pandemic’s low-interest hayday.
The bottom line: while some lenders can’t be counted on to close deals in the current environment, iBorrow is well capitalized and is closing deals. iBorrow doesn’t outsource its funding or rely on credit lines or third parties. iBorrow has funded more than $1.3 Billion in private commercial real estate loans and has the capital right here, right now–and is ready to put it to work for you.
Question 2: Are you actively closing loans?
There is no better barometer for a lender’s financial well-being–or a bellwether for your deals’ viability–than active loan closures.
When was the last loan that prospective lender closed? When was the last time they canceled or failed to perform a loan closing? What was the reason for that cancellation?
In the past month, iBorrow has closed a number of significant deals, including $11.6 million in financing on a 92-unit multifamily property in Georgia and a $3.3 million loan on a 30-room New York hotel property.
In fact, iBorrow is closing more deals than ever, which means its clients are, too.
Question 3: What level of certainty can you provide?
In today’s market, buyers are being left at the proverbial altar as loans fall apart at the last minute.
Borrowers lose deposits. Brokers risk reputations. Both are jilted out of opportunities that may never come again.
Not every deal is going to work out for every lender, but once the origination process starts, a level of certainty needs to be provided.
As a well capitalized lending firm, iBorrow does more than actively close deals. We also rescue deals when previous financing falls through. We do what we say and say what we do, only taking on deals we can deliver on as promised. We take care of our borrowers and form flexible solutions to fit their needs. We don’t re-price loans from the execution of LOI to the closing table. Our LOI’s are fully vetted and approved by our investment committee. We are with our clients, every step of the way–and we have the track record, both past and present, to prove it.
Question 4: How quickly can you close?
In these volatile times, time is of the essence. iBorrow’s capital, expertise, relationships, and in-house service enable us to close in two to four weeks– sometimes less– which is far faster than a traditional bank.
We don’t rely on approval from a third party. Our funds are discretionary. Our approval process allows us to roll out the red carpet rather than the red tape.
Time waits for no one–and neither do great commercial real estate deals. We have what it takes to help you move–and close–fast.
Question 5: Do you offer bridge loans?
If you or your clients need a loan now, you don’t have the luxury to wait until interest rates come down, which likely won’t happen until later on in 2023 at the earliest.
The current rate differential offered by traditional bank lenders compared to private lending has and continues to shrink, with bank rates approaching 6%.
With the delta above and bank rates continuing to rise, borrowers who need a quick close need to consider bridge loans.
iBorrow offers private bridge loans for all commercial property types and has never missed a funding date–ever. iBorrow brings institutional expertise, creativity, and a process that cuts out the red tape to expedite the process. While banking behemoths move slowly and retrade in order to jockey into better financial positions, iBorrow offers flexibility, certainty, and closing times that cannot be matched by traditional financing.
We support value-add and opportunistic acquisitions, recapitalizations, and portfolios with loans ranging from $3 million to $100+ million for all commercial property types.
Can the lender you’re talking to do all that?
The most important question of all.
Today’s market volatility means increased disruption, decreased stability, and the need to ask questions that were previously not top of mind.
With iBorrow’s 100% track record of loan closures, two to four week closing time-frames, creative solutions, and an exceptionally well-capitalized structure, the biggest question may be: why wouldn’t you choose iBorrow?