Whether the destination is a tourist’s dream, a metropolitan area on the rise or a country experiencing major growth, commercial mortgage brokers need to know that leveraging the assistance of a private lender can give motivated clients an edge in affluent markets around the globe. In fact, it’s precisely the in-demand nature of these markets that makes private lending an excellent option for investors, rather than a backup option if a traditional lender falls through.

“For even the wealthiest borrowers, using one’s own money to fund a real estate purchase is risky. They would rather invest their money in other ways.”

Direct private lenders bring three distinct advantages to the table in competitive, wealthy real estate markets. These include speed to closing, flexible deal terms and fewer regulatory controls. Opportunities in affluent real estate markets can move fast. This is influenced by the popularity of the market (i.e., the sheer number of investors who want to plant their flag) and the scarcity of property in some smaller locations.

When there’s a long list of interested buyers putting together offers, becoming one of the first who can get to the table and close the deal is of utmost importance. Although traditional lenders may have few qualms about approving a loan for property in a popular, high-end locale, they still need months to work through their own red tape. Private lenders, however, can meet this need for speed with the resources and skill set to close in as little as a few days.

Private partners

Even in hot real estate markets, traditional lenders may only be willing to fund a certain deal type. These deals need to meet the bank’s strict internal criteria for use, inspections and other quotas.

Such internal criteria may often rule out opportunities to acquire properties such as raw land — real estate that’s extremely valuable within the context of an affluent market but will not pass muster with a traditional lender that has a blanket policy against land loans. This is especially true in international markets, where traditional lenders will rarely work with borrowers on any type of property, let alone raw land.

Private lenders, on the other hand, have flexibility built into their business models. They can take a step back and examine the merits of a deal in a way that traditional lenders may not be able to. Private lenders will take into account the quality and affluence of the market when evaluating a potential opportunity. Plus, they don’t have arbitrary, internal policy-driven limits that may fund a loan for one borrower and not for another. Simply put, the chances of obtaining the funding needed are higher when partnering with a private lender.

For even the wealthiest borrowers, using one’s own money to fund a real estate purchase is risky. They would rather invest their money in other ways. Instead, they go to private lenders for bridge loans to fund their real estate deals while they pursue other funding sources. Private loans give borrowers confidence that they’re making smart investments with a layer of protection.

On top of that, specialized private lenders are highly experienced in navigating the real estate laws in many foreign countries. Borrowers thus get both financial and regulatory security when they seek funding from these private lenders. This combination, including the faster approval processes when compared to traditional lenders that take months to decide, makes private lenders the go-to sources for investors planning to enter foreign markets.

Caribbean islands

Wealthy foreign real estate markets present a multitude of opportunities for mortgage brokers and their clients. Some of the most breathtaking landscapes — and most coveted real estate — can be found throughout the Caribbean.

Driven by the region’s pristine location and the exclusivity created by its wealthy enclaves, Caribbean countries have vibrant economies that are fueled by the global tourism industry. The islands offer limited inventories of real estate due to their sizes, resulting in premium prices that can reach seven or eight figures for the best locations. This growth isn’t expected to slow down anytime soon either.

One example is the French territory of Saint Barthelemy, better known as St. Barts. Property ownership opportunities are highly sought after on this small island that covers about 10 square miles. The limited space and unique surroundings have fueled the interests of international buyers, driving up the premiums that investors are willing to pay for their own piece of paradise. Villas can cost more than $5 million throughout the island, with the most exclusive beachfront properties easily fetching quadruple the price.

Another popular Caribbean destination is St. Maarten, an independent constituent country with ties to the Netherlands. At just over 13 square miles, St. Maarten presents many of the same opportunities and challenges as St. Barts when it comes to exclusivity and availability. The island continues to attract many of the world’s wealthiest people. This presents an opportunity for both residential and commercial investments. For instance, some Guana Bay villas with ocean views can cost as little as $1 million, whereas luxury cliffside compounds can go for $20 million.

The Cayman Islands, a British overseas territory, boasts one of the highest standards of living in the Caribbean. Developed and raw-land investment opportunities abound in this trio of islands. It’s one of the fastest-moving real estate markets in the Caribbean and a corporate magnet due to its status as a global tax haven. The country levies no income tax, capital gains tax or corporate tax. The largest number of offshore companies in the Caribbean region are registered here.

South America

Investment opportunities in several South American countries also continue to attract attention. These include Brazil, where high-end properties in major cities such as Sao Paulo and Rio de Janeiro are multiplying fast, with a particular interest in luxury apartments in both cities.

For instance, the luxury and ultra-luxury apartment sectors in Sao Paulo expanded quickly in the first nine months of 2021, with sales more than doubling compared to the same period in 2020. In Rio de Janeiro, the luxury home market has grown by 200% in the past five years. Combined with a relatively competitive market and an appetite for new construction, these growing cities are attracting investors from around the world.

Although Peru isn’t the wealthiest country in South America, its real estate market has been on the rise. In 2021, new home sales in the Peruvian capital of Lima were up 44% year over year. With a population of 11 million, Lima is among the largest cities in the Americas, and the demand for residential and commercial real estate continues to grow as a result. The nation has a growing population and a housing deficit that can benefit from foreign investment. Peruvian legislation has allowed for infusions of foreign capital to help fuel growth.

Northern neighbor

While Canada might not be the first country that comes to mind when thinking of real estate investment hot spots, our neighbors to the north have proven to be a popular location for cross-border buying sprees. The country’s high standards of living, economic diversity and stable political climate have attracted new residents and flourishing business opportunities.

Cities such as Toronto and Vancouver continue to grow, creating opportunities for investors to build new housing and commercial properties. Sales of all types of housing in Vancouver — a hotbed for tourism, the entertainment industry and the technology industry — rose by 23% year over year in August 2023.

Rents for a one-bedroom apartment in Toronto, the wealthiest city in Canada as measured by the number of high net worth individuals, have grown by 40% in recent years. Additionally, Canada does not have residency or citizenship requirements to own property, making it easy for U.S. investors to access the market.

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Affluent markets around the world offer opportunities for commercial mortgage brokers to help clients expand their business operations. Private capital can serve as a game-changing entry point into these exclusive investment arenas. In a competitive land and property market, the flexibility and speed that a private lender brings to the table can make all the difference between getting the deal done and missing the boat. ●

The post Areas of Affluence appeared first on Scotsman Guide.

New medical facilities are opening at a rapid pace across the United States — and to great success. Vacancies in existing facilities were at a record low of 7.3 percent at the end of 2017. About 35.7 million square feet of new MOBs started or completed construction in 2016, with the average rental rate commanding an impressive $24 per square foot.

Along with the growth of the MOB market, the locations of MOB properties are changing as well. There is a shift away from locating MOBs in traditional, out-of-the-way facilities.

Instead, many MOBs are now being established in shopping plazas and other areas that are more convenient for patients. This allows patients to run errands, do some shopping or maybe grab lunch before or after appointments.

What does this mean for real estate investors and mortgage brokers? A successful investment requires a keen understanding of the many factors driving the growth of the MOB market across the United States.

Market drivers

The growth of the MOB market can be attributed to changes in how health care is administered, as well as shifting demographics. At the center of this growth is the increased popularity of walk-in urgent-care centers and outpatient facilities.

Urgent-care centers take the burden off hospital emergency rooms by addressing wound treatment, broken bones and other immediate health needs that can’t wait for a next-day doctor’s appointment, yet aren’t life-threatening enough to warrant a trip to a ER. These urgent-care facilities also administer vaccines, fill prescriptions, and perform lab work and wellness checks, all without an appointment or long wait times.

There are more than 7,500 urgent-care centers in the U.S., according to the Urgent Care Association of America. Kalorama Information estimates the average facility treats some 300 patients per week and is expected to take in annual revenue of about $1.7 million by 2021. These urgent-care outlets also are more cost-efficient to operate than hospital-based facilities, given many are housed in spaces encompassing as little as 1,500 square feet and are outfitted with less-expensive medical equipment such as X-rays — rather than the far more costly CT or MRI imaging machines found at hospital-based facilities.

Extended operating hours, which are often far more favorable than a traditional doctor’s office, make urgent-care centers a patient favorite. Large corporations have taken notice in recent years, with major players such as CVS Health entering the market with their acquisition of Aetna. Large hospital networks also have been opening urgent-care centers that operate as affiliates of their systems. As a result, smaller health care networks and independent doctors find that they need to catch up, with some opening up their own urgent-care clinics to attract and retain patients.

Outpatient health care facilities take a similar approach as urgent-care centers and perform tests and procedures that do not require an overnight hospital stay. That frees up space in hospitals for patients with more serious needs. Cheaper to build than hospitals and with much lower operating costs, outpatient facilities comprise a significant portion of the growing MOB market, with 2016 construction values for that market estimated at about $7.7 billion.

There’s no shortage of patients either. People are living longer, driving the need for more health care facilities. According to the U.S. Census Bureau, the number of people age 65 and older is expected to nearly double between 2012 and 2050, from 43.1 million to 83.7 million. The Affordable Care Act’s implementation also has extended health coverage to about 32 million people, increasing the number of Americans seeking out health care. This means millions of potential new patients are in need of exams, tests and procedures — and all of them need a place to go.

It’s clear from these trends that MOBs in highly desirable locations make for sound investments for real estate developers, medical professionals and other investors. The MOB market also represents a major opportunity for commercial mortgage brokers and the clients they serve. The question, then, is how to dive in quickly.

Funding challenges

Applying for a loan is a typical part of the real estate acquisition process, but it’s a task that may be completely unfamiliar to medical professionals who wish to invest in the growing market for urgent-care or outpatient facilities. This is where a knowledgeable commercial mortgage broker can help.

Navigating the loan-application process can be dizzying. Traditional lenders will require massive amounts of information to approve an application — such as tax returns, financial statements and details about the property developer, if there is one. Traditional lenders also will require information about the medical practice itself, inquiring about affiliations with hospitals and the facility’s corporate backing. Lenders also will want some sort of assurance that the proposed MOB will still be open and thriving a decade from now. Unfortunately, that means smaller medical practices and independent doctors may be crowded out of traditional financing.

It’s also important to note that a conventional lender may not consider an application based on geography alone. Conventional lenders take location into account, even though health care is needed as much in a town of 10,000 residents as it is in a city of 100,000. When traditional lenders fund loans for MOBs, they are likely to focus on major metropolitan areas, with leases backed by large companies, rather than small-town facilities leased by independent doctors.

Private-lender simplification

Three items are necessary for a loan application with a direct private lender — a clean title report, a clean environmental report and an up-to-date appraisal. A private lender can thoroughly assess an application with those three essential elements in order.

The lender simply wants to know the property’s current value and what it will be worth after renovations, if applicable. This simplified process makes it easy for medical professionals to apply for a loan, even if they don’t have prior experience with real estate or acquisition funds.

Direct private lenders can be flexible with factors that traditional lenders normally won’t budge on. They don’t ask about hospital networks or a large corporate backing, nor do borrowers need to “prove” their facility will still be in business in a decade. The location won’t be scrutinized either: Medical professionals can open an office wherever their patients need them to be.

Most importantly, the streamlined, simplified application with a direct private lender cuts down the approval timeline from several months to a few weeks or even several days. For a mortgage broker, that time difference can be the decisive factor between securing and losing the funding your client needs. A lucrative opportunity for a medical facility in a prime location should not have to wait on a traditional lender’s delayed response.

• • •

The rapidly expanding MOB market is poised for continued growth, as long as borrowers act quickly. With tens of millions of potential customers — many of whom expect convenient locations and walk-in appointments — prime real estate becomes central to ensuring a new medical property’s success.

Placing these facilities outside of hospital campuses and traditional medical complexes is challenging the market definition of where a doctor’s office is located, opening up a multitude of options for medical professionals and real estate developers alike. When the perfect opportunity arises, funding shouldn’t hold back a borrower or their mortgage broker. Head straight to a direct private lender for a quick, simple and straightforward loan-application process.

The post Find the Pulse of Medical Properties appeared first on Scotsman Guide.

If these investment opportunities were in the U.S., you would likely have several traditional- and alternative-lending options to choose from. Once the opportunity crosses international borders, however, many options disappear. How are you, as a commercial mortgage broker, going to get funding?

Borrowers in need of capital will be hard-pressed to find a commercial mortgage lender willing to fund opportunities abroad. That’s the case no matter how lucrative these prospects may be.

Mortgage brokers who work on international deals should know about the barriers for both traditional and hard money lenders that keep them from financing these opportunities. And, when it comes to hard money, they should look for an experienced lender that can successfully navigate this tricky marketplace.

Lender skepticism

When it comes to commercial real estate investments, there’s certainly no shortage of lucrative opportunities outside the U.S., whether it’s related to multifamily housing, hotels and resorts, or even — in rare instances — raw land. Continued economic and tourism growth abroad is certainly driving the need for foreign capital, but many obstacles remain for lenders who need guarantees that their investments will pay off.

A borrower may need working capital, to pay off a debt or to simply purchase a property. Regardless, a lender seeking to fund such real estate opportunities abroad requires that far more scrutiny and due diligence be conducted than a lender funding a real estate deal located in the U.S. A lender needs to know that the project will succeed, which ensures that the loan will be repaid.

To achieve this, direct lenders require a clear title, an up-to-date appraisal and other key documentation that ensures the loan will be used in a sound, responsible and legal manner. They’ll often want to see more information about the property itself, rather than information about the borrower.

These standards are harder to enforce once lenders cross borders into foreign countries. Laws regulating foreclosures, purchase and sale approvals, and other essential parts of the transaction process, for example, can be vastly different than those in the U.S. They can even vary greatly from region to region within the same country. Any language barriers make these obstacles even harder to overcome.

Complicating factors

Many lenders are unsure how to evaluate opportunities in real estate markets in which they are not well-versed. Analyzing demand for a property is much more difficult from thousands of miles away. On-the-ground knowledge of desirable neighborhoods and real estate trends play a part in an accurate appraisal. Without that firsthand knowledge, many lenders are not willing to risk their funds on something with which they do not have hands-on experience.

Currency fluctuations add yet another dimension that complicates an already complex landscape. A foreign currency’s strength against the dollar is susceptible to market volatility, so severe shifts can impact the value of a property or even tank a deal. What happens if a currency’s decline in value jeopardizes an entire real estate project and loan payments can no longer be made? Understandably, many lenders aren’t willing to open themselves up to that kind of risk.

Lenders also need to keep an eye on a foreign country’s political situation. The value of currency or the asset in question may not stabilize in politically volatile countries. From an event as ordinary as a change in administration, to something as extreme as a military coup, these vulnerabilities can be scary to a lender, who may not be repaid due to circumstances beyond the borrower’s control.

If a borrower defaults, a lender could be left holding the bag. Worse, if the property in question was accepted as collateral, lenders will need to coordinate a sale in a country with completely different rules for buying and selling real estate. Simply put, it’s a headache that many lenders don’t want to deal with.

Limited options

When it comes to international real estate deals, a borrower’s search is limited from the start as all traditional lenders and many private/hard money lenders are off the table. In the case of the few U.S. lenders willing to make a loan on foreign real estate, commercial mortgage brokers and borrowers should first and foremost look for signs of that lender’s past success.

Borrowers should partner with hard money lenders that have a strong history of closing loans abroad. As previously mentioned, the many issues lenders face internationally make it impossible for them to simply jump into this market. Lenders with a track record of success, however, have not only proven they can make these complicated deals happen, they have shown they have the infrastructure in place to repeat that success with new clients.

Brokers also should ensure the lender uses an internationally recognized and respected appraiser. The right appraiser for foreign real estate holds up against the U.S.-based lender’s scrutiny and utilizes expert-level knowledge of the country in which the borrower wants to use the loan proceeds. This type of appraisal ensures that both the borrower and lender will get a full picture of the property’s true value.

Rising markets

The world truly is a real estate investor’s oyster right now, with many lucrative opportunities popping up in dozens of countries. Here are three places that have shown significant promise for borrowers who may be in need of capital for real estate investments outside American borders.

The Caribbean. Jamaica and other countries in the Caribbean are experiencing slow economic growth. Ironically, this is mainly due to the lack of foreign-capital investments from the U.S. and other wealthy countries. The growth of resorts, golf courses and other vacation destinations in places like the Dominican Republic, St. Martin and the U.S. Virgin Islands, however, make this region an enticing place for developers to build new properties or expand existing ones.

Reeling from recent natural disasters, countries in this region are eager to rebuild, and private capital is sorely needed to fund the projects that will help them do so. Additionally, the Caribbean is close enough to the U.S. that traveling to a prospective property is not a significant burden for many American-based investors or lenders.

Colombia. This South American country has generated record-breaking tourism revenue following the signing of a 2016 peace treaty between the government and the FARC guerrilla movement. Tourism in Colombia brought in more than $5.7 billion in 2017, opening opportunities to invest in hotels, shopping centers and other popular tourist destinations. Additionally, the Colombian government has recently invested more than 1 trillion Colombian pesos (about $315 million) into the country’s tourism infrastructure, connecting major cities and ports to rural areas for the first time.

Canada. Our neighbors to the north present an alluring opportunity for developers and other real estate professionals who wish to enter or expand into the Canadian market. Strong forecasts for senior housing and other growing property types are creating a market hungry for new construction, as well as property rehabilitation and repositioning — especially in underserved areas where these projects are predicted to thrive.

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For those looking to buy or refinance property, or to complete new construction, hard money is the only available option to secure funding in an international market. But it’s not enough to simply find the funding. A direct private lender also must be educated in the world of foreign lending so they can provide the necessary support to navigate the web of regulations that can ensnare overseas deals.

Most importantly, hands-on experience is a prerequisite. Direct private lenders must have a proven, demonstrated ability to close loans abroad. It not only shows that they have built the right relationships, but that they can successfully close yet another loan for your client’s project.

The post Navigate the Foreign-Investment Market appeared first on Scotsman Guide.