Real Estate Lending with John Femenia

  John Femenia , found of Source Realty Capital , recently closed a 10-property portfolio deal in Hollywood, Florida for one of John’s repeat borrowers.  The borrower came to SRC after another lender wasn’t able to close the deal. This left us a limited amount of time to get the deal done, as the borrower had over $500,000 deposit on down on the property that had already gone hard. Deal Overview The borrower was purchasing a 10-property deal consisting of nine properties that ranged from 2-4 families, and one 6-family property.   The total unit count of the deal was 36 units.    The deal was split up on two different contracts.   Each contract was for $2.6 million, for a total of $5.2 million.   The  borrower put down 10% on each contract, for a total of $520,000.   The properties were 100% leased.   The cap rate for this deal was 6.5%.   Timing The borrower came to John Femenia in mid-December looking to close this deal....

We recently closed a cash-out refinance (DSCR Loan) for one of our more experienced borrowers in Crown Heights, Brooklyn, NY.   This particular borrower focuses on 3-4 family properties in up-and-coming areas of Brooklyn.  They focus on properties with a close commuting proximity to Manhattan. Additionally, our borrower only buys properties where outdoor space can be added. Once the renovation is finished and the property is leased-up, our borrower's property generates significant cashflow, allowing them to pull cash out of the property and move on to their next deal.  This is a classic example BRRR ( Buy, Rehab, Rent, Refinance, Repeat ), method that has allowed countless real estate investors to build wealth.   Let's take a closer look at this deal. Our borrower purchased this property in November 2021 for $999,999.   As you can see in the images below, the property needed significant renovations.   Everything needed replacing- the kitchens, ...

  We all know that in the long-term real estate is a good investment.  But what about right now?  In the past 12 months, the federal reserve has increased rates at the fastest pace in the past few decades. Inflation is running at the highest rate in 40 years.  Home prices are up over 10-15% from last year.  Will real estate prices continue to increase?   Before we answer the question of where prices are going, we first need to go back to see what got us to this point.  In the past three years, mainly since the pandemic, the housing market was fueled with cheap money (low mortgage rates) and a huge increase of activity from people wanting to relocate.  There was also a large period of under building new housing inventory for the years leading up to the pandemic.  Most builders thought that millennials would not want to move to the suburbs, and thus did not invest heavily in new single-family construction.  This proved to be incorrec...