DIVERSIFY & ADD VALUE TO ASSETS Rising interest rates could affect loan size for commercial properties, resulting in higher debt service payments and lower cash flow.
PUT MORE MONEY DOWN
I recently had a client get an interest rate down from 6% to 4.8%. How did he do it?
• He has great credit – you have to have great credit. There are a number of ways to raise credit scores. The best way is to pay down credit card balances. • He put more money down. Instead of 20%, he put down 25%. • He paid 1% of the loan amount. Always take the amount that you will pay and divide it by how much you will save each month to see how many months you must own the property to make that money back. • He called around to a number of banks and credit unions. He found that his credit union had more options than a traditional bank.
Here are investment tips while interest rates are increasing:
Relative to other asset classes, multifamily has historically performed well during inflationary periods. Property owners can raise rents yearly, which can level out with inflation over time, increase property values and maximize cash flows. • Identify value-add assets located in strong markets to increase future equity payout at refinance or disposition. • Invest in healthy assets to maximize profit since rental income covers both debt and expenses. • Utilize a diversified investment strategy to spread your investments across markets and asset types. • Use a good tax strategy. Be certain your CPA utilizes accelerated depreciation and cost segregation to maximize deductible amounts.
WITH A COMBINATION OF DIFFERENT STEPS, YOU CAN SAVE MONEY OVER THE LIFETIME OF A LOAN.
Cassie Wells KW Commercial Little Rock, AK Connect with Cassie
Joseph Marino KW Commerical Atlanta, GA Connect with Joseph
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