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Commercial Mortgage Lending to Get a Big Boost

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Article by Fuquan Bilal, NNG Capital Fund

Commercial mortgage lending could clock in another record year for 2019, and see billions more deployed in 2020. The smart money is bullish on commercial real estate lending and debt. Big players plan to increase their stake in this sector in the months ahead.

That could be a great thing for real estate investors of all sizes, and provide new opportunities for those navigating the space between distressed assets and new capital eagerly waiting to be put to work.

Who is Funding CRE Deals Now

According to the Urban Land Institute:

  • Banks still fund 40% of all CRE debt each year
  • Government sponsored agencies take up 22% of the market
  • Commercial mortgage backed securities make up 16% of the market
  • Debt funds and nonbank lenders account for 11% of lending
  • Life insurance companies make up 10%

CRE Lending Rising

As of the middle of 2019 all commercial mortgage debt totalled $3.5T. Commercial and multifamily mortgage lending grew 10% year over year through the second quarter of 2019, and 29% between Q1 and Q2 according to the Mortgage Bankers Association. There was a 32% rise for multifamily loans specifically. 42% of the loans made in the first half of the year were refinances.

With the stock market still frothy, the political chaos only heating up, and the residential mortgage lending market hampered by over-regulation, even more capital is likely to find its way into commercial mortgages over the next 12 months.

Life insurance companies in particular are preparing to ramp up their activity. Total multifamily loan originations are expected to hit yet another record high in 2020 according to coverage by Housing Wire. Life insurance companies have said they hope to add $50B to $120B in multifamily loans to their portfolios. Even a $10B increase would mean a 30% rise in the total for multifamily lending compared to 2018.

Opportunities For Real Estate & Debt Investors

All of this capital means liquidity for investors. Especially in the form of cheap money. At the same time there are some sizable gaps in the market.

Keep an eye on maturities. The last few years of sprinting and new investors trying to graduate to multi families, without much thought for short deadlines and the need to refinance and restructure debt could present some opportunities.

There are also many borrowers struggling on prime properties that could be ripe for conversions.

The smart money is definitely in, but it needs active investors to put it to work for them.

LEARN MORE:

Discover additional information and learn about investing in secured debt and real estate, please visit NNG Capital Fund

The Best Inheritance You Can Leave Your Kids

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By Fuquan Bilal

What inheritance are you leaving your children?

I know you would probably expect me to say “mortgage notes,” or “passive income properties.” Those are great investments. They might be some of the best types of assets to pass on in an estate. Yet, there are some things which are far more important!

Financial Independence

We all know school has become all but worthless. With the exception of those schools and colleges the big funds and local governments which have turned into cash flow centers and real estate investments. You can do 13 years at school and walk out not even knowing how to use a debit card.

Savvy parents are working harder than ever to teach their kids about money. About how to budget, save, invest, make sure they understand the benefits of financial stability. Some are even teaching them about self-directed IRAs.

Those things are all important. I do all of those things.

Yet, I believe there is something even MORE important. That is teaching them how to be independent.

After all, that’s our one main job as parents. It is to teach them how to survive and thrive on their own.

Instilling Independence in the Next Generation

I rented some units to some college kids. It was amazing to see how they were still clinging to their parents for support at 19 and 20 years old. I don’t know about you, but I was far more independent and had to do a lot more for myself since I was 15. Maybe even 11.

I learned the value of work and hustle at a very young age. I did my own laundry and learned how to cook at 11, and handle personal hygiene.

My kids are now 10 and 16. We used to play mental math games on the way to school. I’ve had them plan meals, go to the grocery store and hunt for deals, and now figure out how to do it all online. I teach them real estate and how to get out in the field.

I’m pretty sure they can stand on their own two feet if they had to.

I want to be sure they won’t have to depend on others for the rest of their lives. Even on me. Knowing how to invest is a big part of that, but mindset is even more important.

Take the Lead

As I reveal in my new book, you can, and should pump positivity into them as possible. Build their minds and spirit. Let them know they can do anything they want. BUT – you’ve got to live it too. Practice what you preach. You can rock their world and shake their mindset big time. Do it well, and consistently and they can also become some of your best accountability partners! They’ll keep you in check.

Lead by example. Do what you want them to do, and explain it. That means budgeting, investing, following your dreams, and stepping up to do difficult things. Teach them to embrace adversity and challenges in order to get stronger in all these areas, so they can get more of what they want and are capable of.

Teach them smart investing and money management and how to stand on their own, who they can get help from and learn from, and to problem solve. With these, they’ll be able turn the smallest monetary inheritance or property portfolio into even greater multigenerational wealth. Failing to do this, and ignoring these conversations while you have the chance, your heirs can blow your multi billion dollar inheritance, property empire and lifetime of discipline and sacrifice in a matter of months.

What inheritance are you leaving your kids? I’d love to know what do you do to build these things into them.

Investment Opportunities

Find out more about investing in secured debt and real estate, go to NNG Capital Fund

 

Fuquan Bilal

Fuquan Bilal founded NNG in 2012 with the principal mission of capitalizing on the growing supply of mortgage notes in the interbank marketplace. Mr .Bilal utilizes his 17 years of residential and commercial real estate success to identify real estate opportunities and capitalize on them. To date, he has successfully managed three private mortgage note funds that primarily invest in singlefamily performing and non­performing mortgage notes. His financial acumen and proprietary set of investment criteria enable him to purchase underperforming real estate assets at a deep discount of face and market values, thereby increasing the value of the assets. This, coupled with his ability to maximize the use of leverage, enables him to build strong, secured portfolios with solid passive income flows.