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What's coming in commercial lending?

SAN DIEGO, Calif. – Nov. 18, 2015 – At the Realtors® Conference & Expo in San Diego last week, lenders and government officials on a panel called “Commercial Lending and Financing: The Ever-Changing Landscape” discussed trends in policy and technology that could change the way deals are funded in the near future.
Here are three predictions to watch for:
More online data related to commercial lending
Elizabeth Braman, CCIM, chief production officer at real estate crowdfunding platform, predicted that over the next five or so years, the increase in the amount of available data will make the capital acquisition process more responsive to the needs of borrowers and lenders alike.
On the micro level, she said it will be easier for borrowers to provide data to lenders, because much of it will come directly from sources such as the IRS (which is already working on an API to make data export easier) or commercial transaction databases such as CoStar. But she also added that big data could help lenders predict trend lines for future valuation purposes, rather than relying strictly on appraisals, which tend to use backward-looking data to determine value.
“That’s where big data gets really exciting,” she said. Appraisers “are only looking at a limited data set. That’s what they’re limited to and the regulations prohibit them from being forward-looking … There’s going to be a lot more predictive analysis.”
But the panel also cautioned against security risks related to increased data in the commercial lending sphere.
“It is a risk no matter where you put it on the Internet … I don’t think anything is 100 percent bullet proof,” said Ruben Garcia, district director of the U. S. Small Business Administration’s San Diego district office. The panel agreed that there will come a day when the entire commercial process is executed online, and Garcia encouraged individuals to do what they can to mitigate, rather than trying to eliminate, risk.
“Be careful. Don’t put anything out there that’s not required,” he said.
More lending options
Projects in first-tier markets building or redeveloping Class A commercial space don’t have the funding issues that Class B and C properties in less popular cities might face. But both of the crowdfunding companies present on the panel said they are happy to be involved in such deals.
“We definitely play in the B and C space,” Braman said, noting that such investments often offer a higher yield for her company. She added that they’re more concerned with whether or not the people behind the deal are market experts who can accurately predict how a development will shake out in the long run. “We look for the guy or the gal who has a deep market knowledge and who knows how to execute on a business plan.”
Kevin Arrabacca, chief investment officer at Asset Avenue, a crowdfunding platform based in Los Angeles, agreed: “It’s more about the quality of the borrower. It’s the borrower who’s paying back the loan, not the real estate.”
Growth in the small business environment
Garcia said there may be more opportunity in the office sector coming soon due to what he sees as a growing interest in entrepreneurship across the country.
“I know the rest of your Realtor friends believe the American dream is owning your own home,” he said with a smile. “But I think in the 21st century the American dream will be running a business and owning your own home.”
Source: Realtor® Magazine
© 2015 Florida Realtors®  
Source: Florida Realtors Feed

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