The 10-year anniversary of the financial crisis has officially arrived. While many remain optimistic about 2018, the timing is giving some investors and lenders pause. The biggest concern for lenders in the coming year is oversupply issues, according to Mitch Paskover, president of Continental Partners. We sat down with Paskover for an exclusive interview to ask about the challenges in the upcoming year and get his advice for securing financing.
GlobeSt.com: What are your major concerns for 2018?
Paskover: The biggest concern for 2018 is potential over-supply in major primary markets across the U.S. While these markets are still in high demand, many lenders are becoming increasingly wary of financing deals in markets that have exceptionally high development pipelines and an influx of new deliveries scheduled to hit the market over the next few years. The fear is that these markets run the risk of becoming oversaturated. In response, lenders have become increasingly more conservative in their underwriting. To close these deals and secure financing, investors will increasingly want to work with finance partners who can devise creative capital solutions to lock down competitive rates and address these lenders concerns.
GlobeSt.com: Because 2018 marks the 10-year anniversary of the Financial Crisis, many have economic concerns. Do you think those concerns are justified, and how is the length of the cycle affecting how you secure competitive financing?
Paskover: The concerns are justified, however lenders and borrowers have been successful in maintaining a strong equilibrium between supply and demand. Of course, many lenders are becoming increasingly conservative with their underwriting as they prepare for a possible market correction. The recent tax package has emboldened many lenders, which should have a positive effect on the market and increase the availability of capital.
GlobeSt.com: What is your advice for securing financing in this climate?
Paskover: To secure financing in this climate, we simply must be more creative. As we move forward, it will become more and more important for mortgage brokers to provide lenders with detailed information on sponsors' track records, comps that justify demand, and investment strategies planned, demonstrating to lenders that these deals are in fact, sound.
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