Will Inflation Accompany Recovery? What Real Estate Investors Should Consider

A bunch of cash and finally some ways to spend it sound like a formula for inflation as America begins to recover from the pandemic.

“Between the closed theaters and restaurants, the prices slashed by airlines and half-empty hotels, and the government benefits paid or in the pipeline, Americans may have as much as $2 trillion in extra cash socked away by this spring,” Reuters said in a piece it posted ahead of the late-January meeting of the Federal Open Market Committee (FOMC).

That piece included this quote from Fed Chair Jerome Powell from earlier in January: “As people return to their normal lives … there could be quite exuberant spending, and we could see upward pressure on prices.”

Fed chair expects ‘transient’ inflation, will tolerate above 2{ac967ad544075fb2f6bcea1234f8d91da186cac15e616dc329e302b7c7326b8c} for a while

Well, the typical response to inflation is to make money more expensive — i.e., raise interest rates — but instead, the FOMC’s two-day meeting on Jan. 25-26 resulted in the Fed announcing on Jan. 27 that it would keep interest rates near zero and that it would continue to buy massive quantities of bonds each month.

Powell did say that he expects to see inflation move higher

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Fintech Cadre Launches $400M Fund Targeting Individual Investors And Will Back Underrepresented Real Estate Operators

Ryan Williams got his start in real estate investing as a student at Harvard University in the years during the financial crisis, sourcing capital from his network to opportunistically buy distressed properties in areas like the Atlanta suburbs. A decade later, after time at Goldman Sachs and Blackstone, Williams was at the helm of his own fast-growing real estate company, backed by some of the biggest names in investing and business, and facing a new economic storm to navigate.

Last spring, as the Coronavirus pandemic ravaged the U.S. economy and all but froze real estate and financing markets, Williams’s real estate financial technology company Cadre saw revenues drop sharply. To ensure survival, Williams battened down the hatches, laying off a quarter of Cadre’s then over 100-worker staff, cutting redundant staff and extraneous growth projects. The move proved overly conservative as financial markets came roaring back and changes generated by the pandemic positively impacted Cadre’s $3 billion real estate portfolio of multi-family

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3 Things Real Estate Crowdfunding Investors Should Know in 2021

Real estate crowdfunding has gained popularity in recent years because it offers access to individual institutional-grade assets that generally require high investment thresholds. If this is an asset class you’re considering dipping your toes into as a real estate investor, there are a few things you should keep in mind. (If you’re completely new to the game, here’s a good guide to get you up to speed.)

Keep an eye on fees

It’s important to watch the fees, both those paid to the crowdfunding platform as well as to the sponsor running the deal. The crowdfunding platform fee is generally pretty consistent within a platform, where you’ll see fees around 1{ac967ad544075fb2f6bcea1234f8d91da186cac15e616dc329e302b7c7326b8c} of your investment amount, but that can vary.

Sponsorship fees are a little bit of a different story. The deal sponsor usually gets an acquisition fee, which is expressed as a percentage of the acquisition price. This is usually in the 1{ac967ad544075fb2f6bcea1234f8d91da186cac15e616dc329e302b7c7326b8c} to 2{ac967ad544075fb2f6bcea1234f8d91da186cac15e616dc329e302b7c7326b8c} range. Sponsors also get a fee upon successfully returning a predetermined amount of cash to investors.

Are you an accredited investor?

Some crowdfunding deals are only open to accredited investors. In case you’re unfamiliar with the term, the Securities and Exchange Commission (SEC)

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20-Plus Publications All Real Estate Investors Should Read

There’s a lot of great reporting being done about the real estate industry, and savvy investors make sure they keep up to date on the latest headlines. What publications are on your reading list these days? If you’re looking to grow your investment portfolio or expand it in a new direction this year, here are some top real estate publications that make investors become subscribers.

Note that while these publications typically offer free content on their websites, readers can upgrade to paid subscriptions for premium content in digital or print format.

Grow your real estate wealth

REI Wealth Monthly is a great read for investors who want to grow their portfolio and build wealth through real estate. It’s billed as the longest-running real estate magazine from the same publisher, Realty411, which also publishes a magazine with this name. Investors seeking financing for their next property will also want to check out PrivateMoney411.

Wealth Management Real Estate (formerly National Real Estate Investor) is offering the same top-notch reporting under its new name, WMRE. The name change reflects the publication’s mission to bring together real estate investors with financial advisors and wealth managers to share insight and best

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4 Things Real Estate Investors Should Know About Unlevered Cash Flow

Real estate investors who want to assess a commercial property for potential purchase, or to see how one they own is doing, should be familiar with the term “unlevered cash flow,” especially if you’re a growing operation — or aim to be.

Also called “unlevered free cash flow,” this financial valuation model is applied to companies and properties alike to determine the cash that’s generated and available without considering the capital structure: i.e., its debt and equity. Basically, levered cash flow considers borrowing expenses — representing what’s leveraged by debt — while unlevered cash flow does not.

Note that “leveraged” and “levered” are used synonymously in many cases, so don’t be confused by that. They mean pretty much the same thing, with “levered” considered the more formal term.

So what more should do-it-yourself CRE investors know about unlevered cash flow as they grow their portfolios and practices? Here are four factors to understand.

What exactly is it?

Basically, unlevered cash flow is the money that goes in and out of a CRE investment without taking financing into consideration. It also can refer simply to the cash a property generates that would be available to distribute to the investor and/or other

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Federal Lawsuit Alleges Brooklyn Lawyer Defrauded Investors

(iStock)

(iStock)

A Brooklyn attorney is accused of bilking real estate investors out of at least $4 million in a home-flipping scheme.

The defendant, Shimon Rosenfeld, allegedly lured would-be real estate investors over a period of four years by promising to buy properties with their money, flip the homes and share the profits with the sellers. Instead, Rosenfeld reportedly pocketed the money and used it to trade securities, according to a lawsuit filed in federal court this week.

On Wednesday, Rosenfeld appeared before United States Chief Magistrate Judge Cheryl Pollak, and was released on $200,000 bond.

“Today, we’ve flipped the script on him and held him accountable for his fraudulent actions,” said William Sweeney, an assistant director-in-charge at the FBI.

In one example, prosecutors allege that Rosenfeld received about $1 million between 2015 and 2017 from an investor to purchase real estate in Greenpoint. When the jilted investors asked the defendant for their money, he allegedly attempted to delay the payments; in one email to a victim, he wrote that “August is a tuff [sic] month to get things done.”

Some of the alleged victims repeatedly gave Rosenfeld money to carry out real estate investments, not knowing that he was funneling

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New Study Reveals 87{ac967ad544075fb2f6bcea1234f8d91da186cac15e616dc329e302b7c7326b8c} of Institutional Investors Expect More or Similar Investment Levels in Commercial Real Estate in 2021 Compared to 2020

NEW YORK, Jan. 27, 2021 (GLOBE NEWSWIRE) — Although the initial lockdowns at the start of the COVID-19 pandemic led to a widespread, sudden halt to many commercial real estate transactions, certain pockets of the industry are projected to have a slow, steady comeback in 2021, while others may experience a V-shaped recovery or a continuing lag, according to a survey of U.S.-based commercial real estate debt and equity investment professionals. The research was conducted by FTI Consulting, Inc. (NYSE: FCN) and Real Estate Fund Intelligence (“REFI”) during the third quarter of 2020.

“Our research shows how varied the expectations for the recovery across commercial real estate sectors are,” said Josh Herrenkohl, a Senior Managing Director and Leader of Business Transformation Services within the Real Estate Solutions practice at FTI Consulting. “The areas where investors expect a V-shaped recovery reflect the thinking that in 2021 there will be a vaccine and that everything gets back to normal. But investors also believe that the recovery for some asset classes will take either a slow, steady U-shaped recovery or an L-shaped scenario, with a further drop and no recovery for an extended period (depression).”

Among the FTI Consulting/REFI study’s key findings:

  • In
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How Real Estate Investors Can Use 223(a)(7) Loans

Loan terms can play a major role in how successful and profitable an investment property is. Lower interest rates can keep the monthly mortgage payments down to leave more cash flow for the investor, and a longer term on a fixed-rate loan can protect them from rate hikes.

Investors with an existing HUD multifamily loan may be able to take advantage of a 223(a)(7) loan to refinance their existing insured mortgage and improve the cash flow of the property. This can allow them to lock in a lower interest rate and reamortize their existing loan to save a significant amount on their mortgage payments.

Here, we discuss what a HUD 223(a)(7) loan is, what it can be used for, and how to get one.

What is a HUD 223(a)(7) loan?

223(a)(7) loans are used to refinance certain HUD-insured debt on multifamily and assisted living properties. Investors typically use these loans to lower their interest rate, increase the amortization, and extend the term on their existing FHA loans.

223(a)(7) loans are nonrecourse and typically provide some of the lowest interest rates and longest terms available to multifamily investors.

What can a 223(a)(7) loan be used for?

Unlike a conventional mortgage, investors

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What Is Land Speculation? A Real Estate Investor’s Guide

Speculating on land has been a tried-and-tested real estate investing strategy for centuries. As the old saying goes, you should buy land because they aren’t making any more of it. So exactly what is land speculation?

This type of investment strategy is characterized by buying vacant land and holding it until development interest increases in an area. Typically, land speculators will buy up undeveloped property hoping bigger commercial builders and employers will enter the area in the future.

Here’s an overview of this type of real estate speculation, the pros and cons of this type of investment strategy, and whether real estate investors should try to get in on the action.

What is land speculation?

Land speculation typically involves the purchase of undeveloped land to sit on for an indefinite amount of time. The thinking behind land speculation is that a future economic event will dramatically increase the value of the land, which can then be sold.

This economic event is usually urban expansion, housing development, or major employers or industries moving into a particular area. The idea is that there has to be a substantial prospect of future economic growth, and that you, the speculator, will benefit from other

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Real Estate Investors: Is It Worth It to Refinance?

With mortgage rates at historic lows, it might seem like everyone is refinancing their home loan. However, as an investor, you may be wondering how to tell if it makes sense for you to refinance a loan on an investment property. Here’s a guide on the subject. We’ll go over what it means to refinance, when it makes sense to take out a new loan, and how refinancing can help you save money. Use this information to help you figure out whether refinancing is right for you.

What does it mean to refinance?

Put simply, when you refinance, you take out a new loan and use its proceeds to pay off your current loan. Refinancing is usually done to secure a lower monthly payment. However, it can also be done to change the terms of the loan to make them work better for the borrower.

As a real estate investor, you’ll most often deal with refinancing in the context of a mortgage loan. You can also refinance an auto loan, any student loans, or even a personal loan you may have taken out to consolidate credit card debt or to finance another big expense.

How can refinancing help you save

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