Some people just hate their money.
We see owners and developers all the time shop hard and evaluate the best ways to construct, repair and manage their properties but not in how or where to finance them. Yet the cost and structure of money has an outsize impact on profitability and flexibility.
Loyalty is a wonderful trait, but Borrowers cannot let that get in the way of finding the right mortgage from the right lender for the right property. This is not a one size fits all line item. Borrowers need to become better educated on the options available in the market as they change rapidly due to current conditions. And remember not all loans whether they be construction, bridge or perm are the same.
We have seen a recent trend toward local borrowers wanting to use national mortgage brokers…. many of them from the money center offices. These firms offer up bright shinny flashing financing that borrowers read about in national publications but for our local Midwest markets do not make sense. A recent example is two multifamily construction loans in Ann Arbor that are located less than two miles apart. One borrower used a national broker out of New York who placed the construction and mezz loans with big fancy NY debt fund and mezz lender at 70% leverage and a rate of 11.5%. Bernard Financial placed the other property’s loan with a Life Company and their own internal mezz for 75% and a rate of 8.5%. Yes, the borrower who went with the out of state broker can boast about NY type financing while the one that went with Bernard Financial and good old fashion more flexible loan structure can boast of saving over $3.0M/year in interest. Who likes their money more?
Another example of borrowers who don’t like their money is not learning about all the options available in the marketplace and staying with either the same lender or broker they have always used. This limits their options and flexibility. When credit is easy everyone is a Commercial Mortgage Broker but when credit becomes difficult like it is now, many smaller brokers who do not have the relationships, correspondent lenders or muscle are not able to supply enough credible options to allow the borrower to get the best loan. Reach out to the larger proven firms like Bernard Financial Group where we represent over 40 lenders and thus provide greater options and flexibility. With the money you save on your mortgage you can buy your old broker a round of golf and dinner.
Finally, know who is servicing your loan. We get more distressing calls during these tough credit times from people who did not place their CMBS and Agency loans with Bernard Financial for assistance with their servicing needs. They can’t find anyone to talk with…they are not able to use their reserves…. they are not able to modify their loans. Huge cost and waste of money. Have your loans fully serviced locally by placing them with Bernard Financial and avoid these problems.
