Commercial Real Estate Investing From A-Z

Today we are recapping the highlights of a 3 day virtual conference that I attended recently. We'll cover: The state of this crisis and what the outlook is. How you can leverage the 3 loan options from the government and what does each of them mean. Things that you can do today and what you should be thinking about for the future. You can read this entire episode here: https://montecarlorei.com/action-items-to-take-today-for-your-real-estate-investments/ Three loans available: PPP – Originally: you had to use it within 8 weeks from the time you got the loan, you needed to use 75% of it for payroll, and 25% for rent, mortgage, utilities. There were no payroll tax deferral if you took the PPP. Now: you have 24 weeks to use it, and the number is 60/40: 60% must be used for payroll, and 40% for rent, mortgage, utilities. And now you can defer 50% of payroll taxes until December 31st. EIDL – gives you $10,000 per employee. When you apply for this grant, you’re applying for the loan, and the SBA is granting these loans, the maximum amount you can get is $150,000 per company, regardless of the number of employees. If you have a management company and a real estate company, you get $300,000. You have 1 year deferral, so you don’t have to pay the loan for 1 year. This is a 30 year loan, at 3.75% interest. Pay close attention to terms of the loan, and get the opinion of an SBA expert. Main Street loan – it’s backed by the Fed, not an SBA loan. There’s no 500 employee limit, talk to your banker for clarity. All 3 of these loans are bank loans, you have to go to the bank and apply, and the SBA pays the bank back. You can get both PPP and EIDL. If you already got the PPP, you can also get the EIDL. What are the things that you can do today, from looking at your existing properties to how you can negotiate for new properties. And what you should be thinking about for the future. Stay away from auctions that will come up because lots of people are looking for that. Hotels are at 22% occupancy, there will be lots of defaults on hotels. Lots of major hotel operators have reserves until October, they have $700-800 fixed cost per door per month. Example of a deal someone just closed: It was a stadium, that cost about $13M to build, it is not being used currently, and has an income from a cell tower on the property, the income from that is $50,000/year. The seller has been trying to sell for just over $1M, two of the previous offers fell through. They came in and offered $900,000 cash, they sold cell tower right away for $700k at closing ($50k income/month at 7% cap) and now they purchased an entire stadium for $200,000! Action Items To Take For Your Real Estate Investments: As far as your existing properties: trim fat and cut expenses As far as preparing yourself for the future: Look into Captive Insurance – need to learn more about it, but it sound like it’s something that you could do to prevent future problems like this shutdown. Will do a podcast about what it is. Invest in Blue cities in Red states. Look at Industrial – Instacart can pick up from industrial instead of supermarket Become valuable to valuable people. Help people solve complex problems. Now is a great time to build a great team. Ask yourself “How can I?” The state of this crisis and what the outlook is: This is far worse than 2008. The implications of this debt is ultra low interest rates, forever. There will be lots of opportunities in 6, 12, 18 months. Subscribe to our newsletter at the top of the page here: http://montecarlorei.com/ --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

We continue our conversation with Russell Gray, the co-host of The Real Estate Guys Radio Show, he is a financial strategist with a background in financial services dating back to 1986. You can read this entire interview here: https://montecarlorei.com/how-can-investors-prepare-to-ride-this-recession-and-what-asset-classes-could-thrive/ How can investors prepare to ride this recession since we are in the early stages, and hopefully there's still some preparation that they can do? There's a thing in business called a SWOT analysis where you do a strengths, weakness, opportunities and threats assessment on whatever you're doing. If I would have done that, in 2008, I would have recognized some of the vulnerabilities that ultimately took me down. So I think that's the first thing you have to do, you have to just look at your portfolio, you have to say, What if interest rates went up? What if rents went down? What if vacancies went up? What if this local market economy changes? You just have to begin to go through and ask yourself, what are some of the things you're hearing, what are some of the possible or probable outcomes of what's going on and how will my portfolio respond to that.  And then begin to take corrective action, you're probably going to realize that you've got some things in your portfolio that are marginal, they're not really that strong. You might want to think about getting rid of those. That's what my buddy Kenny McElroy did. Coming into this, he just began to look at his portfolio and say, I'm going take everything that isn't top performing, super strong, great market, great tenant, great management, great property condition, anything that isn't top tier. They're all good, but I'm going to take the bottom few, and I'm going to get rid of them. I'm going to get liquid because I think the market is going to turn and I think there's going to be opportunity. And that's number two, get liquid now. Getting liquid can be selling things and sitting on some cash. It could be borrowing. Well, the borrowing is good if you still have equity and you still have good credit, documentable income and there are loans available for the types of properties that you have. And you can lock those rates and payments in long term. Now is a great time to do that. I think you might be a little bit late to the party. But if you can do it, I would definitely be doing it. Some people say, Why would you want to increase debt in the middle of all of this that's going on? Don't look at it as increasing debt, look at it as increasing liquidity, because the equity is probably going to end up disappearing for a period of time. As prices fall, your debt is not going to fall, your equity gets eaten up. So if you can liquidate that equity and protect it from the market that serves you in a couple of different ways, when in a downturn, when things are tight and things go wrong, it's always good to have some cash. Number two is if credit markets fall apart, which I think is a likely outcome and that doesn't mean they're going to be gone forever, but it'll be like it was in 2008, where things get tight. We're already starting to see some of that. Then being liquid gives you a competitive advantage. The debt coming out of the marketplace is going to cause prices to drop because not as many people can compete because they can't get funding. But if you have cash, then you can take advantage of those lower prices. And when funding comes back, then that puts air back in the pricing and equity happens. And you end up with a boost of equity. You can't have that boost if you aren't able to buy when air is out of the market, and then ride it up. Russell Gray https://realestateguysradio.com/ Join our newsletter here: http://montecarlorei.com/ --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

Today we get insights from Russell Gray, one of the hosts of The Real Estate Guys Radio Show, he is a financial strategist with a background in financial services dating back to 1986. You can read this entire interview here: https://montecarlorei.com/why-this-downturn-could-be-worse-than-2008-russell-gray-explains/ I would love to hear your thoughts on what you’re seeing is happening right now in commercial real estate. On one side of the commercial real estate ledger, you had retail spaces under tremendous distress because their retail customers, the demographic they served, companies like JC Penney, whose business models were being completely disrupted, these anchor tenants like Sears and Kmart, were just getting wiped out by people ordering online. On the flip side of that, on the industrial side, you saw warehouse and distribution and logistics, just going through the roof. And so there’s always going to be winners and losers in this current environment. You’ve a lot of people changing the way they behave. Companies are finding out that they can have a remote workforce and actually get things done. They may decide, hey, we don’t need all this fancy office space, people would prefer to live at home, or work at home. So maybe we’re going to cut back. I think that if you’re in the office space, you need to really look at the nature of the work that the companies are doing. And does it require physical proximity and collaboration? Or is it something that could be moved to a more diverse workforce, people working at home? You could be vulnerable. Why do you think this will be worse than 2008? COVID-19 hit and now the Fed balance sheet is over 7 trillion. It has nearly doubled just in the four months that we’ve had COVID-19. So on the one hand, you’ve the powers that be the Federal Reserve and the Treasury way in front of the crisis as opposed to 2008 where they were way behind. That’s the good news. The bad news is, this is so much bigger because it isn’t just a small percentage of subprime borrowers that are having a hard time making payments. You have major corporations like Hertz, companies that have been in business for 100 years that are declaring bankruptcy. And the quote in the article that I just read, in fact, I featured it in today’s newsletter is, “No business is structured for zero revenue”. So what we have is a health crisis that turned into an economic crisis, which means that we shut the economy down. It's like having a giant heart attack. And if you can imagine currency, money stopped, like blood stops flowing because the heart stops beating, the economic heartbeat stops beating, the blood stops flowing, then, individual cells, people, and organizations, or organs, they all start to die. And if you don't get the heart started quickly and get the blood flowing quickly, then you get permanent damage. And it remains to be seen if that's going to happen. But when those payments stop being made, then the debt goes bad. And now we're right back where we were at 2008, but much, much bigger. And the problem is everything we did wrong leading into 2008 with the margin and the rehypothecation occasion of the debt in Wall Street, the derivatives are worse today, global debt is worse today than it was in 2008. And the cessation of payments and the defaults and the bad debt out there is much bigger. So just based on that alone, it says that this is probably going to be worse. Russell Gray https://realestateguysradio.com/ Join our newsletter here: http://montecarlorei.com/ --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

This is our second mastermind call with a group of experienced investors to understand where each investor is, and how they are dealing with the Covid-19 quarantine and its consequences on their properties. We had nearly 200 years of real estate investing experience in the call. You can read this entire episode here: https://montecarlorei.com/multiple-asset-classes-mastermind-what-are-top-investors-doing-during-this-crisis/ Mixed Use, Construction, Senior Housing, Multi-family, Short Term Rental Investor Even though businesses are starting to reopen, that doesn’t mean that we have conquered Covid-19. From the capital perspective, for new construction loans, out of the 15 insurance companies that lend in the real estate space, 13 have stopped altogether. The largest one laid off the entire loan origination staff. They don’t plan to get back to loan originations for a while. Capital for construction is almost non-existent unless it’s with HUD. If you go with a bridge lender it’s expensive: Libor + 9 + floor on Libor rate, which is what was happening in 2008/2009.  There is not a lot of appetite for new deals unless they’re deeply distressed, it will take time for deals to start to emerge. People that are trying to do deals now look desperate and lacking in perspective of where the market is really heading. He would be patient. Passive Investor (since 2002) This guest invests in stabilized assets. He said that it takes time for prices to come down, and from his experience, it can take 1-2 yrs for things to hit bottom. He has been sitting on the sidelines until prices drop since late 2016 across all asset classes. He pushed his operators to sell in 17, 18, 19. He thinks that rents will be down, vacancies will go up and cap rates will go up. He is skeptical at looking for things this year, unless it’s very unique. He will be waiting for vacancy levels, market rents, and market prices and will see if cap rates will adjust. Even if the cap rate is better, we don’t know what the NOI will be in one or two years, it may be lower then. He has been hearing that syndicators are getting about 1/3 of the normal responses for deals, another syndicator dropped his minimum investment for the first time ever. He will be on the sidelines regardless of what’s happening to the economy in the short term, but more because the election that is coming up, and how this may have an impact in real estate. Diversified Portfolio Investor Their multi-family properties are performing well (B-class), in April and May they performed better than anticipated. Some of the people that lost their jobs have higher income now with unemployment. Medical office: they reached out to tenants and offered rent relief proactively, about 50% of tenants took them up on it. Their properties are in areas that are now reopening, they will reach out to the tenants in June and find out what is happening and if they need any further assistance. NNN properties: they are performing very well. Some investors still need to place their cash somewhere. Looking forward to understanding where’s the most pain for the most extreme distressed properties. Pricing hasn’t changed yet, price expectations from sellers haven’t come down to meet price expectations from buyers yet. Multi-family Investor and Broker The 2 deals that he was working on during the pandemic actually ended up closing, despite the fact that banks asked for more reserves. The sellers gave concessions, about 8% concession on the price, the seller also put up escrow money and provided insurance on the income over the next 6 mos. Subscribe to our newsletter at the top here: https://montecarlorei.com/  --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

What are DST's and how are they different from other forms of real estate syndications? Can you 1031 exchange out of a DST? Jason Salmon, Senior Vice President and Managing Director of Real Estate Analytics at Kay Properties and Investments LLC shares some insights with us. You can read this entire interview here: https://montecarlorei.com/what-are-dsts-1031-exchange/ What is a DST and how is it different than syndications and REIT's? Most upfront would be the 1031 eligibility, REIT's are not eligible for 1031 exchange straight away. There's always a way through different channels to eventually get there. But apples to apples, one cannot 1031 exchange directly into a REIT and the DST through what's called revenue ruling 2004-86 is on the books and there's a way for people to 1031 exchange in. Additionally, when that real estate is sold, they have the opportunity to do another 1031 exchange out moving forward. In and of itself, a DST is a syndication, but it's a hybrid because it's a really specialized sort of syndication whereby it is 1031 eligible. And in many cases, syndications of different sorts, whether it be partnerships or LLC's or any which way in that format would not be a 1031 vehicle for fractional, partial ownership. Those entities themselves could do a 1031. But if it's made up of private fractional ownership, it doesn't fly. So from a 1031 exchange standpoint, I think that's the linchpin of everything there. Notwithstanding from a direct cash investment standpoint, they all could work in similar ways, REITs could be public or private. They take on different complexions that way. If it's a syndication in and of itself could be put together, it could be friends and family. Whereas the DST, at least the DST space that we dwell in would have multiple layers of due diligence on various levels, specifically the real estate, the deal itself, and then the asset manager, or the sponsor firm running the deal just to be able to have that deal, see the light of day if it passes that due diligence. It's just a little bit different format. But again, going back to the beginning, I would contend that the 1031 eligible eligibility is the biggest differentiator. I did not know that the accredited investors themselves could not 1031 into another property in a standard syndication. That's very important to know because it has significant tax implications. They could all go together, theoretically, if it was a partnership or an LLC. But as far as being comprised of multiple partial or fractional ownership, that's where it wouldn't pencil. Can you talk about how asset managers don't get any returns? They pass everything to the investors. There is a cost of doing business generally. But in the Delaware Statutory Trust structure on the back end, unlike most syndications, there is no waterfall. Basically, they can't profit share at the back end, there is a disposition fee that is built in. Those have varying degrees. I wouldn't be able to cite it on this call. It would be deal specific, but it's there and it's akin to closing costs. Like anything else. But it wouldn't be like your typical two and twenty model or some kind of promote on the back end, because structurally in the DST they cannot profit share. So if a 100 million dollar deal was sold for one hundred and twenty million dollars after four or five years, if that was a net number, net of closing costs and all the associated closing fees, then the investors would indeed get their pro rata share of those proceeds. That's the bottom line for how DST's are structured. Jason Salmon jason@kpi1031.com Subscribe to our weekly newsletter here: http://montecarlorei.com/ --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

What is happening to retail during Covid-19? What is happening to offices? Which REITs could be good investments right now? Which areas are going to thrive, or not, during this crisis? Which asset classes should you keep in mind? Deidre Woollard is a writer and editor for Million Acres with two decades of experience covering all aspects of real estate. You can read this entire interview here: https://montecarlorei.com/which-areas-are-good-to-invest-in-commercial-real-estate-today/ What are you seeing is happening in commercial real estate nowadays? I think there's a lot of things happening right now. Certainly the biggest impact is definitely being felt in commercial across the hospitality and retail with so many closures in different states. We're starting to open up in various areas, but it's all still very tentative. And one of the things I think that everyone is worried about is is a secondary outbreak and another round of closures. What do you think is going to happen to the real estate market, given your thoughts of where the shutdown is going, and if we’re going to have a second outbreak? I certainly think it’s challenging, definitely certain sectors are being affected more than others and some sectors are benefiting a little bit. One of the things that we’re seeing is industrial real estate, there’s an ongoing need for last mile warehousing. Industrial was the top performing sector last year, and it will probably be a relatively strong sector this year. Whereas hospitality and retail are being very heavily affected. The revenue per room in hotels is at historic lows, and it’ll be a slow recovery for some of those sectors. If you had unlimited funds to invest today, when do you think you would deploy that? And in which asset classes would you focus on? One of the interesting things is that everyone is watching the residential real estate market and looking for prices to drop, and it doesn’t seem like that’s going to happen anytime soon, because supply and demand are pretty well matched right now. One of the sectors that we’ve been looking at over Million Acres is multi-family real estate investment trusts, for example. Multi-family was already predicted to have a pretty strong year this year. There’s obviously a lot of demographics that support multi-family continuing to grow. Household formation is on the rise. I feel like multi-family is still going to be strong, especially in those markets where you have a lot of tech employment. Places like Seattle, Charlotte is a good example. Southern states have really seen a lot of people moving in and so you when you have that high population, those are good spots for multi-family. What do you think will happen to the retail sector? It's an interesting sector because there are different parts of retail that will be strong and different parts that will suffer more. Simon Property Group is reopening some of their malls. As they’re doing this, they’re starting to put different rules in place in terms of how many people you can have in the mall, or an individual store, having hand sanitizers available, and things like that. But how much foot traffic can you have in a store? And how much foot traffic do you need in order to pay your rent? Cheesecake Factory stopped paying rent in April. The Gap had stopped paying rent. So the large malls are definitely having difficulty. Deidre Woollard Deidre.Woollard@fool.com Join our facebook group here: https://facebook.com/groups/montecarlorei --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

Today I am covering what I think is going to happen to the economy, which will inevitably affect real estate prices. You can read this entire episode here: https://montecarlorei.com/is-now-a-good-time-to-buy-commercial-real-estate/ If you are a listener of this podcast, you know that common sense is not common. And up until now I am not seeing a lot of common sense thinking out there. Starting with how the stock market is doing. Stocks are very high given what is happening in the world. On top of that, I don’t see too many people talking about the consequences of how everything is interconnected. And they’re not talking about how, in my opinion, this will trickle down to what I think will be a very bad recession. For all of you who have been taking the time to hone your skills, to learn, to make connections in the real estate world, to build your reputation: congratulations, our time has finally arrived. Why? It pretty much consists of four factors that are all correlated: rents going down, vacancy going up, cap rates going up and lending getting tight – which is exactly what is happening right now, and will continue to happen. So why do I think things will get bad because of the Coronavirus / Covid-19? It’s simple, everything is interconnected, let’s take just one example: if people cannot hold large events for at least one year, that alone is already a huge portion of our economy, so how can that be? It’s simple, it trickles down to everything else. Let’s take some industries that are connected to holding large events: the music industry with concerts, sporting events, conferences, the entire economy of Las Vegas, and every company that depends on holding live events, for example Tony Robbins. Most of the employees that work for these industries, will be let go or furloughed. These employees all have bills to pay, food to buy, they have kids, mortgages, rent, etc. Even with unemployment checks, they won’t be splurging, going to restaurants, or going on trips. And with that, the restaurant business gets hurt, the travel industry, and that is obviously already happening, (Airbnb just got $2 billion dollars in loans at half of their last valuation, and they’re paying 10% in interest on that money!), the clothing industry also goes down, and every industry that is related to disposable income: nail salons, massages, buying new cars, etc. And now all of the employees in these industries get hurt: they are let go, or get furloughed. And these companies not only let go of employees, but they also cut their costs, they won’t be investing much in new technology, in advertising, etc, That trickles down to the tech industry. I get a daily digest of what’s going on in the tech world, and today alone, the digest had the following news: Netflix sales are up, another tech company is cutting the salary of all staff by 25%, another tech company furloughs 600 people, another let go of 13% of its workforce. This is how everything is interconnected. Listen to our How You Can Lose 50% of Your Property Value in One Downturn episode: https://podcasts.apple.com/us/podcast/how-you-can-lose-50-your-property-value-in-one-downturn/id1451874700?i=1000454715311 Join our facebook group discussion here: https://www.facebook.com/groups/montecarlorei Contact us here: https://montecarlorei.com/contact-us/ --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

Commercial loans are what brings your real estate deals to life, and given the fact that the Coronavirus has affected lending significantly, we are keeping a pulse on what is going on, and what the potential impacts will be in real estate. Some topics we are curious about are: How should borrowers prepare for lending as we start to come out of this? What will likely happen in the lending industry over the next 6+ months? How should loan contracts look like moving forward? Billy Brown will help us with some answers. You can read this entire episode here: https://montecarlorei.com/how-is-lending-changing-with-covid-19-and-what-are-the-impacts-in-real-estate-prices/ Has much changed in the lending industry over the last two weeks? Agency debt: if you haven't talked to your agency debt lender, do. Right now they are up and running, but expect delays in that, especially if you're putting contracts or offers in properties right now. Expect at least a 90 day close. And you're going to need escrow for 12 to 18 months of payments and reserves at closing. So your raise is going to be much higher. They're going to scrutinize properties left and right, as far as your rent rolls and payments and all of that are getting scrutinized, with good reason. Bank lenders or depository lenders: right now they are scrambling. They were already low on deposits. And they’re going to get lower. So lending for them is going to be tighter for a couple reasons. One is the fact that you’ve the SBA program which is running through the depository lenders that they’re going to have to facilitate. People don’t understand what’s going on with that process so they don’t know how to even answer questions. The other part of it is the forbearance from the existing loans. Non bank lenders, lenders that actually do the more unique things, Non-QM lenders, hedge fund type of lending where they create loans, balance sheet them, and then sell off the notes to Wall Street. Wall Street doesn’t buy anything right now. How should borrowers prepare for lending as we start to come out of this? It really depends on where you’re at in the process, if you’re in the middle of a purchase, or even a refinance that you’re trying to close the next 30 days. You have to ask yourself a lot of serious questions around your third party risk. Are your tenants going to be able to pay? If they can’t pay, do you have enough reserves to be able to withstand 6, 12, 18 months of lower income. We’ve seen some lenders on good properties, on a refinance, say that they’re going to refinance more properties worth this, we do believe is going to be a shorter recovery. But what we’re going to do is just protect you and us we’re going to ask for payments, we’re going to cash you out, but we’re going to ask for payments to make sure that we’re paid, that you’re paid, as well as CapX and all that. They’re not going to release funds for you to go pay off credit cards, or go buy another property. If you’re in the middle of a purchase, the lender is your friend. Find out what information do we need to have to make sure that the asset I’m buying is still going to be a good asset after this is done. If you’re not a buyer right now, and think that some sales will be going on. What do you need to do to get prepared? The first thing is let’s get your finances in order. Get your loan package already prepared. Organize all your documents, your taxes, W-2’s, 1099’s, pay stubs, bank statements, PFS, all of that into one place where it’s easy to access. Billy Brown www.billybrown.me Join our conversation here: https://facebook.com/groups/montecarlorei --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

What is the state of the self storage market in this environment? What should operators prepare for? Where should you look for opportunities? We talked with RK Kliebenstein, President of Coast to Coast Storage, an industry veteran with over 30 yrs of experience. You can read this entire episode here: https://montecarlorei.com/step-by-step-actions-for-self-storage-operators-to-take-during-downturn/ How should the operators prepare for this potential economic hit? For storage managers, your health comes first. I know that that’s going to be an unpopular position with some of the owner operators as employers, that their staff would perhaps not come to work, but I think that we can work from home in many cases, we don’t have to have a lot of contact with the public. But more than anything else, I honestly believe that a self storage manager’s first responsibility Is to themselves, and their family. Going to work in an unnecessary capacity is not a recommendation that I would give them. If it’s safe for them to go to work because they don’t have public contact, and they’re not in high contact with places and objects that have been touched by the public, that’s a consideration, certainly, but I know a lot of offices have just said that they’re not going to have contact with tenants directly. They’re open via chat, email, telephone. For storage owners, it’s a different consideration as we now go into where are you at in the debt cycle. Those stores that are in highly competitive markets, where they themselves or their competitors are in lease up and there are a lot of vacant spaces, and those in the third category, the very high levered owners are going to be the hardest hit by the event and will have to make the toughest decisions. I don’t know that we’re going to see the real effect of this for perhaps 60 or 90 days as loan clauses with MAC clauses in them (Materially Adverse Condition clauses) begin to be in effect from the lenders and then also the consideration of force majeure clauses, which don’t occur in self storage month to month rental agreements, but certainly would occur in finance arrangements and contracts. It will be interesting to see how that all begins to play out and how the Self Storage sector may fare against other asset class type of lending. Keeping in mind, Self Storage has notoriously had the lowest foreclosure rates, regardless of economic conditions of any other asset class. The only one that ever has come really, really close to it are NNN leases and with triple A credit companies, and also, interestingly enough mobile home parks. Loans What I’m seeing in terms of new loans right now is interesting. The CMBS market, securitized loans, for self storage at least, has pretty much collapsed completely. The bond market being unstable, and that being where these loans are sold, until that bond market is firmed up and we know where the pricing is going to be, I would say the CMBS market is likely to be on hold. I’ve even seen them because of the Material Adverse Conditions or MAC clauses commitments that were set to fund over the last 10 to 15 days. We’ve seen a number of different reactions to the current environment but I think the CMBS market is basically collapsed. I think the only viable market right now is the life insurance company market, they seem to still be quoting, and closing loans that were in process. I think that their underwriting has changed a bit. But that market is still a little bit active. When the first reaction to the turn in the economy was to lower the Fed rate, that actually put a lot of lenders in a position to increase the interest rate floors. RK Kliebenstein rk@askrk.com www.askrk.com --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

With over 200 years of combined real estate investing experience in one call, we hosted a mastermind call with several highly experienced investors, and multiple asset classes. They are investors in retail, office, industrial, mobile home park, multi-family. Below are the takeaways. You can read the entire call script here: https://montecarlorei.com/steps-to-take-during-a-crisis-all-asset-classes-top-investors-mastermind/ Timing Lots of people have a wait and see attitude. Others are taking a hands on approach and reaching out to tenants in advance. It's in times like this, that fortunes get made. That's exactly what Warren Buffett does. He has a ton of cash available for situations like this. George Ross, who has been working with Trump for several years said that now it's a great time to buy, all you need is courage. Retail Reality is starting to sink in as tenants don't pay rent, some tenants are saying they won't pay rent for at least 4 months. Some investors are saying that the most realistic datapoint will actually be on May 1st. We are working through lots of loan reworks as well as lease amendments are being negotiated. We're interpreting the CARES Act that was recently passed, updating all of our tenants on what they can apply for through the SBA and really trying to dial in on the loan forgiveness for April and May. So that has been a huge initiative of ours. We've a lot of legal documents and collaborating with other like minded folks across the country to figure out best practices. We were under contract in a deal, thank God, our money didn't go hard. We got in front of this guy a few weeks, we asked for an extension. But we are seeing some slowdown in CMBS and that was one of the vehicles that we were going to use, which required us to pivot a little bit and rethink this. Trammell Crow executives were sending memos to one another and the same message was sent over and over again from some of the best guys in the business: not getting over leveraged, staying lean and focused, hiring the right people, and just really doubling down on the fundamentals of the business. Developer  I did survive the 2009 crisis, and was heavy in real estate when that happened and watched a number of people get wiped out. This is very different, it's not the same at all. But this is interesting times. I'm not a typical value add guy. I've worked in all spaces, I'm hearing from people all over the country in all different types of properties in different classes and with different challenges and different issues right now. And the one common theme is it's too early to tell really anything, we just don't know. It depends on how far and how deep this goes. We do know that the capital markets are a little tight right now, and the rules are changing daily with that, in terms of what they're asking for and covenants and reserves. And they're getting down now to where they're underwriting specific assets and specific markets by the street and block on refinances, and especially cash out refinance, and acquisitions. So the credit markets are getting very interesting. Senior Housing, Hospitality, Multi-Family (Developer and Operator) We are in an environment where the rules have changed and we don't know what they are. Until we know what the new rules are, it's going to be very difficult to play the game. Oftentimes you see people trying to play a new game by the old rules. And if they do, they'll get crushed. It really is like no other game. We're trying to do something that's unprecedented. Join the conversation here: https://www.facebook.com/groups/montecarlorei What are you doing to prepare for what's ahead? --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support