In the early ’90s, I found my way into the real estate world. It just so happens that the same year, a recession found me. When jumping into buying and purchasing properties, I had to learn how to navigate my way through not only a newfound profession, but a situation where money was tight and opportunities were endless.
When you put yourself into that type of predicament, you learn how to survive differently from someone who has previously battled and overcome these scenarios. As I look back on my career, I realize I’ve been through three recessions, and I’m ready to go into the fourth.
Buying & Developing In A Recession
One scenario, in particular, I had a deal pro forma on the construction side. I had come through for acquisition and development, owned the land and had entitled it. There was a ton of equity in it, and I was sitting in about 35% loan-to-value.
During this time, I had a typical two-year run with commercial bank maturities in June. When the recession hit, we were in January, so I clear at year-end and I call the banker and say, “June is going to come and I’m not going to build by then, so I need an extension.” It’s typical for a developer to ask things like this and normally, it’s a one-pager you get back and fill out, and then you get the extension. But, I got nothing back.
When Banks Merge
A month later, I get a phone call and I’m told, “We’re merging and we’d like you to get this loan off our books and we know you can. Please do that for us. We’re not going to carry any acquisition development and construction pieces into the next deal.” I pick up the phone. This was a seven-digit loan we were talking about, not a small community bank deal.
I’m sitting here going, “I haven’t defaulted on a thing. What am I going to do here?” I call the banker and I’m like, “What happens if June comes and I don’t have this off your books? Are you going to at least give me more time?” They’re like, “We got to see.”
Networking To A Resolution
I start doing what any other good businessperson would do. I start networking to a resolution. I’m beginning to Google. Have you ever Googled for a seven-digit loan? It’s like, “Upload your credit score, upload your financials.” I’m like, “I’m going to put my top-rated credits on the internet and what, you’re going to send me a few out?”
No, hence the rise of FinTech, which solves a lot of problems. People in pain say, “Let me give the quickest solution. I’ll pay a higher rate and I’ll give you everything. Get me out of pain,” but it’s like, “there’s got to be a better way.”
The Beauty Of Technology
In comes Leverage. Within five minutes, I was able to run my potential transaction through a software that analyzes my data against today’s common bank guidelines. Before this, I wondered if going to another bank, especially during the recession, was even worth my time!
But, with Leverage, I didn’t have to go through the entire process of chatting with various lenders to try and get approved. I had the statistics to prove that I was bank-ready and commercial lender approved. I could talk the same talk as lenders and even connect with them within the software.
If you are a Commercial Real Estate Developer, Professional or Investor, you have to check out this tool. It has changed the way I finance my investments and I feel more confident going into any type of financial situation.