Multifamily investments and straight talk from the banker

Commercial Real Estate: What's new in 2009?

Rick Fitzgerald -The MultiFamily Expert (AAM Capital) — Mon, 12 Jan 2009 14:33:39 -0600

Business owners and real estate agents should receive some glimmer of hope for 2009 sales. What should we see in 2009?

Government backed commercial loans will continue to grow in 2009 as investors and banks seek the safest real estate investments. In the near future, only two sectors of real estate will receive the benefit and guarantee of the government.

SBA financing fell for several years as banks and secondary market loan programs offered a cheaper alternative along with less paperwork. That all changed in 2008.

The biggest change in the SBA program for 2009 should be the current proposal to raise the SBA guarantee to 80% for all existing and future loans until 2010.

This change would be a catalyst for banks to lend and a higher valued investment for a secondary capital market. The proposal is a good step towards rebuilding the secondary capital market for investors.

Multifamily investment loans currently are the same 2008 guidelines with no foreseen changes right now with the expectation that the support of Fannie Mae and Freddie Mac continue.

Their investments in multifamily properties have outperformed the market tremendously with the non-performing properties still well under 1%.

Business owners and real estate investors who are just now seeking financing in the new lending age generally should seek a lending professional before submitting an application to assure they have the best opportunity for an approval.

We shifted our market focus in 2008 to multifamily due to secondary market meltdown. In 2009, we have partnered with a bank whose niche is working with the scratch and dent borrower. Strong borrowers with good financials and credit will be able to obtain an SBA loan at their local bank. However, there will be a great number of "out of the box" borrowers who will be declined. Our bank is seeking those borrowers.

_______________________________________

Multifamily Investments Expert

AAM Capital
5000 Alpha Lane
Chattanooga TN 37421

Office 423-870-2285
Toll Free 800-452-9287

Rick Fitzgerald
Your Multi-Family Investment Expert

Choose AAM Capital

Find out why investors choose us. Multi family investments include Fannie Mae, Insurance, CMBS AND Portfolio Lending.

commercial@aamonline.com
Fax 423-443-4784

We need your help!

Rick Fitzgerald -The MultiFamily Expert (AAM Capital) — Fri, 09 Jan 2009 12:41:53 -0600

Each of us who earns an income (and even those of us who don't) in the real estate market should pay attention to forth coming legislation that helps and encourages the buying and selling of real estate related securities.

Currently there is legislation raising the amount of an SBA guarantee to 80% on all current, future or existing first lien mortgage loans until September of 2010.

This will free up capacity and capital for banks who have risked lending to business owners recently as well as encourage other banks to participate.

All of us in the Active Rain community benefit from this SBA change. You, your family and friends livelihood all depend directly or indirectly on someone obtaining funding as a business owner. And most business owners own homes.

If you would please right now send an e-mail to the names listed below in support of the “SBA 504 First Mortgage Guaranty - Secondary Market”. Encourage them to raise the SBA guaranty to help stimulate all of our local markets.

Senate:

Kevin Wheeler: kevin_wheeler@small-bus.senate.gov Ph. (202) 224-5175 or (202) 224-8496

Nick Coutsos: nick_coutsos@small-bus.senate.gov Ph. (202) 224-5175 or (202) 224-4175

Matt Walker: Matt_walker@small-bus.senate.gov Ph. (202) 224-7884

House:<

Adam Minehardt: adam.minehardt@mail.house.gov Ph. (202) 321-9300

Barry Pineles: Barry.pineles@mail.house.gov Ph. (202) 225-5821

____________________________________

Multifamily Investments Expert

AAM Capital
5000 Alpha Lane
Chattanooga TN 37421

Office 423-870-2285
Toll Free 800-452-9287

Rick Fitzgerald
Your Multi-Family Investment Expert

Choose AAM Capital

Find out why investors choose us. Multi family investments include Fannie Mae, Insurance, CMBS AND Portfolio Lending.

commercial@aamonline.com
Fax 423-443-4784

Feds pulled another $800B out of their................

Rick Fitzgerald -The MultiFamily Expert (AAM Capital) — Tue, 25 Nov 2008 16:31:28 -0600

Feds pulled another $800B out of their ………………hat? Taxpayer hat that is.

Actually that’s not even accurate. The Fed is essentially creating the $800B first to purchase debt and then using taxpayer money to weed out the bad loans. The initial plan to purchase bad loans from banks was scrapped but has now been restructured to buy $500B worth of higher quality mortgage securities.

In addition, the Feds will purchase bundles of consumer debt, credit card debt, student loans and car loans in an attempt to free up the seemingly frozen solid credit markets.

Let’s stand back here and take a look at how the surviving banks made out. The industry has been criticized for booking tremendous profits while taking huge risks and then being propped up, bailed out, and then practically having all loans now guaranteed by the Feds. We even fund the loan loss reserves on the guarantee.

It’s probably not fair to say that the banks have refused to lend trying to leverage consumer pain into a government handout but it looks like that to some. The Feds have done everything possible to get banks to lending to consumers again before Christmas.

Everything except loaning directly to consumers but that will be coming if the banks don’t fork over loans. We can call it the “Consumer Loan Administration” or CLA.

We might as well have the profit if we are going to guarantee it all. Lastly, the bad loans are still sitting on bank books and tax payers will eventually have to ante up again to buy those as well.

It’s been absolutely amazing how the Feds have been able to orchestrate such historic moves while still maintaining a sense of confidence in the banking industry.

Who would have thought that the investment banking industry would have collapsed in such a short period of time? It’s inconceivable that so many investment banks cut off their head, shot themselves in the chest, broke both legs and then jumped into a volcano to ensure there could be no survivors.

And all for a buck.

___________________________

Multifamily Investments Expert

AAM Capital
5000 Alpha Lane
Chattanooga TN 37421

Office 423-870-2285
Toll Free 800-452-9287

Rick Fitzgerald
Your Multi-Family Investment Expert

Choose AAM Capital

Find out why investors choose us. Multi family investments include Fannie Mae, Insurance, CMBS AND Portfolio Lending.

commercial@aamonline.com
Fax 423-443-4784

Get your loan from the Federal Reserve Bank?

Rick Fitzgerald -The MultiFamily Expert (AAM Capital) — Tue, 18 Nov 2008 17:23:43 -0600

It has become apparent that all the fist shaking and rhetoric going on between the Feds and the banking industry regarding consumer lending is going nowhere.

I wondered just how Congress can mandate a bank to lend money. No matter how you cut it, lending money is a matter of choice for banks. You might dictate the circumstances as congress has done with housing but not the choice.

As long as a bank does not decline a loan due to the protected under the Equal Credit Opportunity Act (among other legislation), you are out of luck. Our banks simply raised the standards when faced with losing profits.

Can you blame them? I don’t think you can. The standards will rise until the reward meets the risk. They are a For Profit business.

What I do think is the government will be forced into directly lending, buying or guaranteeing almost all consumer loans for the time being. This could be done through a new entity created with private and bank capital backed by the government. After all, the Federal Reserve Bank was created in the same manner. Now you just have to deal with consumers.

There will be of course, a whole lot of belly aching going on from many sides on this idea. However, the Feds are backing literally every lending aspect anyway.

In the end, consumer credit has been driving this bus for a long time. And it seems without a license or practically blind.

Take the bus driver off a bus and see if the passengers can complete a route. Now make sure you replace that driver with an educated high income sort of guy. See where he thinks the route should be driven. A bunch of folks will never even see the bus.

I see the government needing to get a new bus driver.

___________________________

Multifamily Investments Expert

AAM Capital
5000 Alpha Lane
Chattanooga TN 37421

Office 423-870-2285
Toll Free 800-452-9287

Rick Fitzgerald
Your Multi-Family Investment Expert

Choose AAM Capital

Find out why investors choose us. Multi family investments include Fannie Mae, Insurance, CMBS AND Portfolio Lending.

commercial@aamonline.com
Fax 423-443-4784

Will the Federal Reserve Bank loan money to consumers?

Rick Fitzgerald -The MultiFamily Expert (AAM Capital) — Fri, 14 Nov 2008 08:39:24 -0600

A prior post of mine stated the banks were hoarding cash. That was met with a bit of attitude by a couple of folks. Apparently they disagreed with me. The facts are the banks have borrowed far more money from the Feds than they have loaned to consumers or other banks.

The Feds are in a dilemma right now. They have no leverage to force banks to lend. They can’t even stop the “overall compensation” to EXECUTIVES as banks claim they need to pay them to keep these valuable employees.

That’s a bunch of baloney. A whole lot of it actually.

Any executive that was that valuable was aware of the risks the bank was taking and should not be rewarded.You can bet the service employees will bear the burden. Make no mistake about the Big 9 being forced to step up first to take the money. That would be including Wells Fargo. All of them would be insolvent if held to the mark to market value standards and a good old fashioned tough audit.

They just had the biggest most powerful investor in the world make an investment into their bank guaranteeing their existence. What we will see is more direct government lending. Consumers will borrow from a Fed program to obtain the extra down payment needed to purchase properties. But we will have of course higher lending standards. Not sure how all those congressman who pushed affordable housing through to borrowers with less than stellar credit will handle that small problem.

What we are seeing is a dusting off and reforming of the SBA financing program. The SBA will be a businessman’s best friend. All student loans will be government guaranteed directly or indirectly. Even car loans will be an indirect Fed backed loan if the bailout umbrella covers the industry.

The Fed will eventually back almost everything in an effort to get the economy moving and bank loaning money. The Feds are already backing a bank to bank loan to encourage lending. The major industries will all have a federally backed loan in some form.

I’d bet a dollar that if the banks hold out long enough, the Feds will not only bail them out but also back all of their loans to the consumer in many cases.

___________________________

Multifamily Investments Expert

AAM Capital
5000 Alpha Lane
Chattanooga TN 37421

Office 423-870-2285
Toll Free 800-452-9287

Rick Fitzgerald
Your Multi-Family Investment Expert

Choose AAM Capital

Find out why investors choose us. Multi family investments include Fannie Mae, Insurance, CMBS AND Portfolio Lending.

commercial@aamonline.com
Fax 423-443-4784

Multifamily investments standing still

Rick Fitzgerald -The MultiFamily Expert (AAM Capital) — Mon, 10 Nov 2008 14:27:19 -0600

The multifamily purchase market is almost at a standstill right now. Seems like the entire investment market has taken the rest of the year off.

A multifamily investment lender like an insurance company has basically folded their tents for the year leaving even less choices. We have two insurance companies still willing to make an investment in the sector putting very good loans on their books. I'll say that again. Very good loans.

The general consensus is the multifamily investment market is more than holding it's own in both performance and cash returns. Occupancy is up but collections are as well washing each other out. Surveys indicate that the multifamily investment is capable of high returnswhile maintaining its value better than most other real estate investment options. Even out pacing the NNN properties.

Thank goodness for the Fannie and Freddie Multifamily programs as the backing has kept something going in real estate for both agents and investors. More than a leap of faith, it's actually making a profit.

Refinancing is taking a large percentage of the business right now. Multifamily investors are becoming a bit comcerned over bank balloon notes and calling more often.

No one is able to predict how the banking industry will be handling maturing notes. What we do know is they want deposits right now and not risk.

___________________________

Multifamily Investments Expert

AAM Capital
5000 Alpha Lane
Chattanooga TN 37421

Office 423-870-2285
Toll Free 800-452-9287

Rick Fitzgerald
Your Multi-Family Investment Expert

Choose AAM Capital

Find out why investors choose us. Multi family investments include Fannie Mae, Insurance, CMBS AND Portfolio Lending.

commercial@aamonline.com
Fax 423-443-4784

Wachovia's $24 Billion dollar mistake

Rick Fitzgerald -The MultiFamily Expert (AAM Capital) — Wed, 05 Nov 2008 22:58:19 -0600

It’s hard to feel sorry for someone who makes a $24B mistake. Wachovia’s former chief Ken Thompson was quoted as saying “It’s a dream come true” when the bank came to an agreement to buy Golden West in mid 2006.

Golden West was a well known thrift that had been around for some 20 years in the western markets. The empire was built almost solely on one product known as an “Option ARM” or “Pick a pay”. In fact, 99% of the mortgage portfolio was this one program. But they had branches and deposits that evidently blinded Thompson.

Golden West was the baby of a Herbert and Marion Sandler. The Sandler’s were made famous recently in a skit by Saturday Night Live. The Sandler’s reaped a profit of more than $2B on the sale.

There was a lot of housing bubble talk in mid 2006 and accusations after the agreement that the Sandler’s were selling out knowing their portfolio was going down the tubes. The talk was dismissed as a “bunch of garbage”.

An old time banker like me could clearly see that times were a changing and borrowers were becoming more and more stressed. Although no one predicted a complete meltdown, the riskier mortgage products were going to be in trouble.

What really peeves me off is the need for taxpayers to shoulder the burden of such outrageous decisions made by so small a number of people. Ken Thompson was the driver of the deal for Wachovia eventually writing off more in losses than they paid for Golden West. And the portfolio is still losing money today.

Of course, Wachovia wasn’t the only bank who made a disastrous entrance into various mortgage markets but it illustrates the stupidity that created such a huge meltdown. Now the once 4^th largest bank in the nation will be just a memory and a mistake the tax payers will pay for.

___________________________

Multifamily Investments Expert

AAM Capital
5000 Alpha Lane
Chattanooga TN 37421

Office 423-870-2285
Toll Free 800-452-9287

Rick Fitzgerald
Your Multi-Family Investment Expert

Choose AAM Capital

Find out why investors choose us. Multi family investments include Fannie Mae, Insurance, CMBS AND Portfolio Lending.

commercial@aamonline.com
Fax 423-443-4784

Wild ride for 2009 Multifamily Investments

Rick Fitzgerald -The MultiFamily Expert (AAM Capital) — Mon, 03 Nov 2008 19:07:46 -0600

Wow, it’s been a wild ride this year so far. Multifamily investments and performance are all over the board depending on which survey you read.

One thing for sure is a real slow down in purchases most likely caused by the presidential election. Multifamily investors reap great benefits utilizing aggressive accounting strategies so any discussion among candidates about a tax increase generally slows down the purchase market.

Surveys have indicated that rents have leveled off for most areas. I think this is fair to say. It’s always more difficult to raise rents in this environment. However, demand may increase as more borrowers are turned down. Overall costs of maintaining even a rental home is more than many want to take on in money or time.

Most surveys reported that expenses are going up as well. I hope no one actually got paid for that survey result. That’s sort of “duh”. A lot of wholesalers and energy suppliers have imposed increases due to the energy costs. Is anyone going to lower them now that their energy costs are actually lower?

Long term results of the surveys all pointed to multifamily investments being one of the best to purchase or own. I agree with that if for nothing else, investors can’t buy investment that is as highly leveraged as multifamily.

Vote for somebody on Tuesday!

___________________________

Multifamily Investments Expert

AAM Capital
5000 Alpha Lane
Chattanooga TN 37421

Office 423-870-2285
Toll Free 800-452-9287

Rick Fitzgerald
Your Multi-Family Investment Expert

Choose AAM Capital

Find out why investors choose us. Multi family investments include Fannie Mae, Insurance, CMBS AND Portfolio Lending.

commercial@aamonline.com
Fax 423-443-4784

The unhappy banker

Rick Fitzgerald -The MultiFamily Expert (AAM Capital) — Fri, 31 Oct 2008 15:54:51 -0500

I read a couple of articles that finally made me feel a little better about all the bailout talk and shenanigans going on lately.

If you are a home owner and fall behind in payments, you may be eligible for a new fangled program. If you are a home owner who struggles, makes tough decisions like not going to the doctor but make your house payments on time, you are out of luck.

The banking industry knows full well the next huge issue for them will be credit card losses. These losses cannot be blamed on anything or anyone except the lending decisions banks made to earn more profits. Consumers took to the cards sort of like the lottery. Can’t blame an alcoholic if he drinks the beer you gave to him can you? Then again, some can blame him. It’s his choice. No one made him drink.

So there is some ground swell to having bailout money set aside to enable the banks to forgive a large portion of the credit card debt consumers currently owe. This is not as simple as it may seem either. Any forgiven debt is actually considered taxable income so the IRS must sign off on the deal as well.

Forgiving the debt would help the consumer with a new start and option rather than adding a new bankruptcy stat and foreclosed home. It may be on my tax payer back to make that happen but we have bailed out some really rich folks this year. Can't say we have really bailed out the consumer yet that I can tell.

The credit card debt is on the minds of banks big time. And will further delay the economy and improved banking health if not addressed soon. And you know if the industry has introduced the idea, there is a lot potential losses coming out later about it.

A happy banker beats the heck out of an unhappy one. Just ask the Feds.

___________________________

Multifamily Investment Experts

AAM Capital
5000 Alpha Lane
Chattanooga TN 37421

Office 423-870-2285
Toll Free 800-452-9287

Rick Fitzgerald
Your Multi-Family Expert

Choose AAM Capital

Find out why investors choose us. Multi family investment options include Fannie Mae, Insurance, CMBS AND Portfolio Lending.

commercial@aamonline.com
Fax 423-443-4784

Is your bank on this list?

Rick Fitzgerald -The MultiFamily Expert (AAM Capital) — Thu, 30 Oct 2008 12:00:30 -0500

Among the latest banks to receive approval for government funds are:

Capital One - $3.55 billion
SunTrust Banks - $3.5 billion
Regions Financial Corp. - $3.5 billion
Fifth Third Bancorp - $3.4 billion
BB&T Corp. - $3.1 billion
KeyCorp - $2.5 billion
Comerica Inc. - $2.25 billion
Northern Trust Corp. - $1.5 billion
Huntington Bancshares Inc. - $1.4 billion
First Horizon National Corp. - $866 million
City National Corp. - $395 million
Valley National Bancorp - $330 million
UCBH Holdings Inc. - $298 million
Washington Federal Inc. - $200 million
First Niagara Financial Group Inc. - $186 million

Some of the banks are not failing, just propping up capital reserves. A couple intend to use the funds to purchase "ailing banks". A couple are a bit shaky. If your bank is on this list, it's actually a good thing. The Feds have declined a few banks borrowing needs and those will most likely be on a short list which is not a good thing.

Lending money to banks to buy out smaller troubled banks may be a good idea. Saves the FDIC reserves and earns a little bit of interest for the Feds. That point ought to be disclosed though but any negative news on failing banks regardless is always top secret.

___________________________

Multifamily Investment Experts

AAM Capital
5000 Alpha Lane
Chattanooga TN 37421

Office 423-870-2285
Toll Free 800-452-9287

Rick Fitzgerald
Your Multi-Family Expert

Choose AAM Capital

Find out why investors choose us. Multi family investment options include Fannie Mae, Insurance, CMBS AND Portfolio Lending.

commercial@aamonline.com
Fax 423-443-4784

Little bank birdie told me.....

Rick Fitzgerald -The MultiFamily Expert (AAM Capital) — Tue, 28 Oct 2008 13:55:54 -0500

I noted in a previous post, I’d like to be a fly on the wall in some of the Fed meetings. Well I wasn’t a fly, but I have found a little bank birdie who revealed some very interesting information regarding some of the Fed’s moves.

The birdie was actually a formal bank statement released to stockholders explaining their balance sheet along with insider banking knowledge of the Fannie and Freddie bailout and their bank losses as a result.

I blogged many smaller community banks were left holding the bag on Fannie and Freddie stock. In fact, they were encouraged to buy and allowed to count the asset to meet the Feds capital reserve requirement. The American Bankers Association reported about 27% of all banks held one or the other GSE stocks.

This particular small bank was holding just over $1M in Freddie stock and really miffed at taking the charge off. The Feds could have protected all bank investments with no more than a $15B exposure but they didn’t.

But they did protect Goldman Sach’s investment ties and others by nationalizing AIG to the tune of over $120B dollars. That’s what got the bank miffed big time. Fannie and Freddie stock were considered to be as safe as any investment. The takeover stated clearly to every financial institution and investors worldwide that nothing is safe now. And banks stopped lending to each other.

But that’s not what the little bank birdie was really crowing about. It was the Fed’s backdoor guarantee of the Japanese Bank Mitsubishi investment into Morgan Stanley. Morgan Stanley was reportedly negotiating with the Japanese bank when Lehman Brothers was failing. But that wasn’t all that true. The fact was according to the little bank birdie, they were negotiating with the Feds on preserving their preferred stock position fearing the Feds would make another drastic move as in letting them fail or taking preferred equity.

One analyst I spoke to regarding Warren Buffett’s $5B investment into Goldman Sach’s completely dismissed the notion he had received a back door guarantee from the Fed’s as well. He stated there is no way the Feds would make a private agreement like that because; well because that would be really, really bad.

That it would.

___________________________

Multifamily Investment Experts

AAM Capital
5000 Alpha Lane
Chattanooga TN 37421

Office 423-870-2285
Toll Free 800-452-9287

Rick Fitzgerald
Your Multi-Family Expert

Choose AAM Capital

Find out why investors choose us. Multi family investment options include Fannie Mae, Insurance, CMBS AND Portfolio Lending.

commercial@aamonline.com
Fax 423-443-4784

Anyone from Canutillo TX or El Paso?

Rick Fitzgerald -The MultiFamily Expert (AAM Capital) — Sun, 26 Oct 2008 22:57:29 -0500

I'd like to know if anyone is familiar with this little bend in the river. I was the only white boy in my class many times. Didn't have a white girl in my class until I was a freshmen.

Took until I was 12 to figure out I was a Mexican. Wouldn't trade the experience for the world.

Other places, El Paso and Odessa and Big Bend, Fabens or Cathedral. Bel Air, Bowie, El Paso High,

And of course, Juarez

The AMERICAN BAILOUT

Rick Fitzgerald -The MultiFamily Expert (AAM Capital) — Sun, 26 Oct 2008 22:36:39 -0500

I use a dozen or so sites to obtain information about the financial sector and in multifamily investments. I started to count the billions and billions of dollars that are being invested here and there and some more way over there.

My calculator just couldn't compute the numbers. You know it's a lot of money when you start counting trillions instead of hundreds of billions.

One analyst stated casually that one company would only require just over a $100 billion. When did we get so casual about $100 billion.

According to my calculator. I have to be honest, the numbers were so high that it boggled me mind. But I am confident that if we took the trillions of dollars promised to banks, investment banks, investors, insurance companies, GE Capital, GM, Ford, cities, counties, pensions, hedge funds, foreign banks, ......................(I'm sure I left someone out)

and invested that between every adult man and woman in the US, we would save the economy, stop foreclosures, feed the homeless and helpless. They even could tax us on the investment.

Someone get a better calculator and tell me how much of an investment per person that would be.

___________________________

Multifamily Investment Experts

AAM Capital
5000 Alpha Lane
Chattanooga TN 37421

Office 423-870-2285
Toll Free 800-452-9287

Rick Fitzgerald
Your Multi-Family Expert

Choose AAM Capital

Find out why investors choose us. Multi family investment options include Fannie Mae, Insurance, CMBS AND Portfolio Lending.

commercial@aamonline.com
Fax 423-443-4784

Fed bailout used to buy National City?

Rick Fitzgerald -The MultiFamily Expert (AAM Capital) — Sat, 25 Oct 2008 23:25:02 -0500

Is PNC going to use some of the $700 Billion Fed money to buy National City? This may be difficult to prove but the idea is just very unsettling. There may be some good uses for this but using it to purchase another bank is just not what the doctor ordered. Nor was it in the minds of the Treasury or was it?

There have been so many historic moves and most likely moves that have never been made public. Keep an eye on the money trail and your fingers on the key board to protest the newest move by the banking industry.

___________________________

Multifamily Investment Experts

AAM Capital
5000 Alpha Lane
Chattanooga TN 37421

Office 423-870-2285
Toll Free 800-452-9287

Rick Fitzgerald
Your Multi-Family Expert

Choose AAM Capital

Find out why investors choose us. Multi family investment options include Fannie Mae, Insurance, CMBS AND Portfolio Lending.

commercial@aamonline.com
Fax 423-443-4784

Multifamily Investment Rent roll form

Rick Fitzgerald -The MultiFamily Expert (AAM Capital) — Tue, 21 Oct 2008 22:39:35 -0500

I received 2 calls this week from mortgage brokers requesting a blank copy of a multifamily rent roll. On our web site at www.themultifamilyexperts.com, you will find free forms to use.

The page is located at:

http://www.themultifamilyexperts.com/Resources

Rent roll forms should be complete and accurate. Multifamily investors should always have the historical rent roll occupancy handy. Rents should have a stabilized occupancy for at least 90 days but 6 months is preferred.

The New 2009 Multifamily Credit Crunch Guide is on line now with the most up to date real estate investment guide available. If you own income producing property, this is the investment guide for you.

___________________________

Multifamily Investment Experts

AAM Capital
5000 Alpha Lane
Chattanooga TN 37421

Office 423-870-2285
Toll Free 800-452-9287

Rick Fitzgerald
Your Multi-Family Expert

Choose AAM Capital

Find out why investors choose us. Multi family investment options include Fannie Mae, Insurance, CMBS AND Portfolio Lending.

commercial@aamonline.com
Fax 423-443-4784

The $58 Billion dollar elephant we own

Rick Fitzgerald -The MultiFamily Expert (AAM Capital) — Mon, 20 Oct 2008 12:23:41 -0500

The numbers surrounding "credit derivatives" are staggering. So much so, I just had to research this beast to find out what they are exactly. Where did they come from and who can I hang?

The link will take you to an excellent article "The $58 Trillion Dollar Elephant in the room" written by Jesse Eisinger. it probably explains this beast better than the 100 or so articles I have researched. Jesse deserves great credit for making this simple enough that I could understand it.

http://www.portfolio.com/views/columns/wall-street/2008/10/15/Credit-Derivatives-Role-in-Crash#page1

___________________________

Multifamily Investment Experts

AAM Capital
5000 Alpha Lane
Chattanooga TN 37421

Office 423-870-2285
Toll Free 800-452-9287

Rick Fitzgerald
Your Multi-Family Expert

Choose AAM Capital

Find out why investors choose us. Multi family investment options include Fannie Mae, Insurance, CMBS AND Portfolio Lending.

commercial@aamonline.com
Fax 423-443-4784

Try and follow the National Debt Calculator......betcha you can't

Rick Fitzgerald -The MultiFamily Expert (AAM Capital) — Sun, 19 Oct 2008 21:52:57 -0500

This is our actual estimated National Debt going faster than you can count.

___________________________

Multifamily Investment Experts

AAM Capital
5000 Alpha Lane
Chattanooga TN 37421

Office 423-870-2285
Toll Free 800-452-9287

Rick Fitzgerald
Your Multi-Family Expert

Choose AAM Capital

Find out why investors choose us. Multi family investment options include Fannie Mae, Insurance, CMBS AND Portfolio Lending.

commercial@aamonline.com
Fax 423-443-4784

2008 Multifamily investors profit & loss survey

Rick Fitzgerald -The MultiFamily Expert (AAM Capital) — Sat, 18 Oct 2008 13:17:41 -0500

The National Apartment Association just published their 2008 Survey of Income and Expenses for multifamily investors. Hint.........click on the guide :)

This guide is useful whether you are a Multifamily Investor or just own rental property. Listing or selling agents may be interested in getting a peek at rental rates, income and expenses in this current environment.

___________________________

Multifamily Investment Experts

AAM Capital
5000 Alpha Lane
Chattanooga TN 37421

Office 423-870-2285
Toll Free 800-452-9287

Rick Fitzgerald
Your Multi-Family Expert

Choose AAM Capital

Find out why investors choose us. Multi family investment options include Fannie Mae, Insurance, CMBS AND Portfolio Lending.

commercial@aamonline.com
Fax 423-443-4784

Credit crunch impacts Alabama

Rick Fitzgerald -The MultiFamily Expert (AAM Capital) — Fri, 17 Oct 2008 18:25:06 -0500

The credit crunch has hit a sector that until now hasn’t really been out there in the media’s eye. Many Small Business folks and consumers have been crushed by the credit freeze. Larger companies struggle with investors in the short term commercial paper market too scared to invest in them.

Who else could be at risk?

Well it turns out; it’s someone very close to home. And folks should pay attention to it. It turns out to be Birmingham Alabama.

Many people remember when New York City almost went broke because of mismanagement. This one is different. Sure there were some decisions and a little corruption here and there that didn’t help much. Still, there are tons of folks willing to invest in when a major city or county issues bonds. Aren’t they?

Nope. Not in today’s world where investors fears carry more weight than profit.

More specifically, it’s Jefferson County, home to Birmingham who rolled the dice. Jefferson County took the modern financial option rather than take the traditional route of long term fixed rate bonds. The county borrowed $3.2B to fix some messy plumbing problems and now finds itself way behind in meeting its obligations. Generally, they would have some options but the municipal bond market has totally imploded.

The county will be in the center of the media’s attention very soon as it is almost certain they will file bankruptcy on the debt. A default will put a huge nail in that bond market where any investors would have legitimate second thoughts. And create more fear in the hearts of investors holding similiar investments.

The ramifications of a default are far bigger than AIG or Lehman Brothers. How could AIG be more important than Birmingham, power plants and all the huge projects that are financed? We haven't even mentioned the banks involved who have billions at stake. If your going to borrow make sure you can bring down the entire country with you.

Alabama wants a bailout too and who could blame them. Bailouts are so common, I thought I saw one on the dollar menu at McDonald's.

___________________________

Multifamily Investment Experts

AAM Capital
5000 Alpha Lane
Chattanooga TN 37421

Office 423-870-2285
Toll Free 800-452-9287

Rick Fitzgerald
Your Multi-Family Expert

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commercial@aamonline.com
Fax 423-443-4784

So you want to borrow from the bank?

Rick Fitzgerald -The MultiFamily Expert (AAM Capital) — Thu, 16 Oct 2008 17:38:29 -0500

Here’s the low down on the current financial crisis.

Effectively, the entire consumer and business lending market is now in the hands of the banking industry. No more investment banks or investor funds looking for higher yields (thanks to the Lehman Brothers failure).

Our latest survey of lenders and banks indicated that all are as busy as they want to be. The majority are cutting back personnel at the very moment that our economy needs them most.

Treasury Secretary Paulson called the 9 largest banks to the table because they hold 50% of the nations bank deposits. He needed them to show the Feds are serious about providing capital to any bank that simply asks for the money. It’s the capital to lend to their communities. Banks have been reluctant to ask Big Daddy for money. Cash is not the problem for banks. It is FEAR.

Currently:

Not everybody who wants to borrow will be approved. In fact, many will not qualify in this new age. But money is the grease that makes our world go round. Unless you win the Lottery, households do not create enough spending power with the stagnant payrolls we have seen in the past decade. So we borrow because our homes and 401K's HAD more value than our debt.

Investors and business owners should expect low leverage financing for the next couple of years. Typically 65% LTV for most small business owners should be expected. They will need a lot of tax breaks to get by.

I think we will see some form of direct government loan programs in the near future as home lending will lack much leverage to provide much stimulus. Home buyers and home owners with good credit will need a government held second mortgage in some form to help purchase and refinance loans.

SBA will need to be reformed and it should be done sooner rather than later.

The Multifamily Investment market has easily outperformed most all other real estate sectors. We expect that many of our financing programs will be back. It's still the highest leverage at 80% LTV.

The Great Depression didn’t happen because of the stock market failure or lack of a government response. It happened because banks were failing and that fear caused the banks to stop lending. Businesses then failed and the rest was history.

This isn't about the subprime borrower any more. It's about you and me.

___________________________

Multifamily Investment Experts

AAM Capital
5000 Alpha Lane
Chattanooga TN 37421

Office 423-870-2285
Toll Free 800-452-9287

Rick Fitzgerald
Your Multi-Family Expert

Choose AAM Capital

Find out why investors choose us. Multi family investment options include Fannie Mae, Insurance, CMBS AND Portfolio Lending.

commercial@aamonline.com
Fax 423-443-4784

When Banks hoard cash: Part 2

Rick Fitzgerald -The MultiFamily Expert (AAM Capital) — Wed, 15 Oct 2008 13:45:33 -0500

When Banks hoard cash: Part 1

http://activerain.com/blogsview/716392/When-Banks-hoard-cash

The historic meeting of the 9 banking CEO’s came with a surprise for most of them. Taking a page from the Godfather, each of them was offered a deal they couldn’t refuse.

They were handed a one page document requesting their signature and agreement to sell bank shares to the government. It only took 3 ½ hours to convince all to sign.

Several CEO’s were not receptive to it but most were ready to sell for the capital injection (TAXPAYER MONEY) of $250 Billion. I’d like to have been a fly on that wall but I’d bet there was a lot of discussion. Then again, maybe I can't handle the truth.

LIBOR is the benchmark equivalent for banks as the Consumer Confidence Index is to Main Street. It is our gauge on how confident the banks are in us and each other. And LIBOR hasn’t been going too well with no bank willing to part cash to another bank unless they are buying it.

Banks have been hoarding cash during these difficult times although the Feds have done now just about everything they can. The capital injection and other moves made now puts the banking industry in a tough position. Lend or else.

Lend or else what? Well lend (the TAXPAYER’S MONEY) or don’t make any money because there are no substantial alternatives any more. Lend or suffer like the rest of us. Every financial sector is down (except for my multifamily investment market) with no place to go for profits except to Main Street.

The way the banks now see it is this. The old adage when you didn’t need the money, the banker was always around. When you did, he was nowhere to be found. This is a true adage. The people who need or want money in this financial environment are the ones banks feel are at most risk to default.

The average consumer who has decent credit simply doesn't want to or can't invest in a market like this although there seems to be great opportunities in many markets. Those with substantial assets aren't willing to take a chance as well and that includes your banks.

Get to know your local community banker well. Large banks will be much less willing to take a chance until this has faded off the headlines.

I think we will need a capital infusion as well. I don’t care if it comes from the Government (which I think it will) or the banks.

Someone fork over OUR cash.

___________________________

Multifamily Investment Experts

AAM Capital
5000 Alpha Lane
Chattanooga TN 37421

Office 423-870-2285
Toll Free 800-452-9287

Rick Fitzgerald
Your Multi-Family Expert

Choose AAM Capital

Find out why investors choose us. Multi family investment options include Fannie Mae, Insurance, CMBS AND Portfolio Lending.

commercial@aamonline.com
Fax 423-443-4784

Wow! More historic Fed moves...

Rick Fitzgerald -The MultiFamily Expert (AAM Capital) — Tue, 14 Oct 2008 12:27:20 -0500

The Feds made yet another historic move in gathering the largest bank CEO’s to a meeting in Washington. The meeting was to go over details of the latest government move.

The Feds will purchase preferred stock in the nine largest banks and expand from there. Several of the banks were Citigroup, Inc., Wells Fargo & Co., JPMorgan Chase & Co., Bank of America as well as Morgan Stanley.

Not included in the statement was Goldman Sachs but I’d bet $1 that they will receive some of the initial money as well. Due to Treasury Secretary Paulson’s history with them and working on the rescue plan, it is probably a sensitive subject for the Feds. I think you will see the money quietly infused and announced after the fact. All of the named banks can use the capital but the next wave of banks who receive the help will be the ones really needing the assistance.

Some more details of the rescue plan were disclosed including FDIC insuring all non interest bearing deposits. Large companies have been severely challenged in moving funds around trying to figure which bank is most healthy. Smaller regional banks welcome this move.

Additionally, the Feds will now insure all bank to bank loans for 3 years hoping to help the credit gridlock. The Feds will be charging an insurance premium to the banks.

This current credit environment will go down hopefully as the most financially historic challenges ever to hit our capitalist economy even beyond the Great Depression. We are fortunate that we have some who did learn from history.

Politically speaking, I think all of congress should be booted out and lobbyist outlawed to ensure they get our message. Members of Congress now attract tremendous special interest money and power the longer in office. Limiting terms and banning lobbyists may get the majority of them acting in our best interests instead. Make them come out in the real world to live for awhile.

Americans biggest challenge now is fear. Fear of too many things. One of our biggest virtues is our mental toughness. We do what needs to be done and I am proud to be an American.

___________________________

Multifamily Investment Experts

AAM Capital
5000 Alpha Lane
Chattanooga TN 37421

Office 423-870-2285
Toll Free 800-452-9287

Rick Fitzgerald
Your Multi-Family Expert

Choose AAM Capital

Find out why investors choose us. Multi family investment options include Fannie Mae, Insurance, CMBS AND Portfolio Lending.

commercial@aamonline.com
Fax 423-443-4784

Fox vs. Jim Cramer

Rick Fitzgerald -The MultiFamily Expert (AAM Capital) — Mon, 13 Oct 2008 14:33:51 -0500

I watch a variety of shows including MSNBC, FOX and CNN. On each network, some of the talent I like, some I don’t.

In the fall last year, I was surprised to see Wall Street virtually ignoring the financial meltdown that had reared its ugly head. Gas was going up and the financial sector going down generally doesn’t bode well for business or consumers.

But the talking heads on most shows were peddling stocks and the stock market providing forecasts that to me were crazy. Home sales were going down and lenders were closing their doors. How could that not impact stock values.

Jim Cramer was one peddler in particular caught my attention because he was always screaming. So much so, I always muted the TV. I was surprised to see him take such a full speed ahead approach to investing. What I know is that this talking heads have an inherent interest in recommending you buy.

At the very least, I thought he should have turned a bit conservative. I thought he was dead wrong but what do I know?

Fox Business News has taken him on personally trying to discredit his advice. The video link below is almost shocking:

http://gawker.com/5059535/jim-cramer-begs-america-to-abandon-hope

___________________________

Multifamily Investment Experts

AAM Capital
5000 Alpha Lane
Chattanooga TN 37421

Office 423-870-2285
Toll Free 800-452-9287

Rick Fitzgerald
Your Multi-Family Expert

Choose AAM Capital

Find out why investors choose us. Multi family investment options include Fannie Mae, Insurance, CMBS AND Portfolio Lending.

commercial@aamonline.com
Fax 423-443-4784

FREE 2009 Multifamily Credit Crunch Guide

Rick Fitzgerald -The MultiFamily Expert (AAM Capital) — Thu, 09 Oct 2008 22:00:40 -0500

The 2009 Multifamily Investment Crunch Guide

Link is now available. It has been edited from our normal underwriting guidelines to provide a better understanding how the current financing crunch is impacting multifamily transactions. It’s designed for investors who need some current information. It should also give agents some idea of structuring a sale or financing for most multifamily investments.

A large number of banks have simply stopped lending. The remaining banks are cherry pickin deals because they can.

The current credit crunch does need some “esplaining”. I’d use the word “explaining” but in this case the credit crisis doesn’t make much sense. Literally, our economic power generator that normally runs on… say GAS … has sputtered to a halt. Almost anything that isn’t government backed is having a tough time finding buyers.

The Feds really did not think the Lehman Brothers failure through very well thereby throwing a huge number of investors around the world into a frenzy. Investors are all looking for a safe place for their money especially those short term bond holders. I think the Feds would like a tap back on that decision.

___________________________

Multifamily Investment Experts

AAM Capital
5000 Alpha Lane
Chattanooga TN 37421

Office 423-870-2285
Toll Free 800-452-9287

Rick Fitzgerald
Your Multi-Family Expert

Choose AAM Capital

Find out why investors choose us. Multi family investment options include Fannie Mae, Insurance, CMBS AND Portfolio Lending.

commercial@aamonline.com
Fax 423-443-4784

Another historic FED move!

Rick Fitzgerald -The MultiFamily Expert (AAM Capital) — Wed, 08 Oct 2008 14:49:08 -0500

The Federal Reserve Bank dropped their Fed Fund rate by .50% today. What made this a historic was because of the coordinated move with all of the world's central banks at the same time including China. Japan and Australia have made similar moves but issued statements of support. Russian on the other hand dances to their own beat.

Dropping central bank rates has immediate global impact in this environment. Coordinating the drop and statements at the same time indicates the concern of almost all governments over the current crisis.

The real positive is the fact we did have a coordinated move as it will take more than the US to resolve the issues that are plaguing the economy. Global markets will see this as a real positive as well. Hopefully 401K's and investors earn a few billion of the $2T back soon.

___________________________

Multifamily Investment Experts

AAM Capital
5000 Alpha Lane
Chattanooga TN 37421

Office 423-870-2285
Toll Free 800-452-9287

Rick Fitzgerald
Your Multi-Family Expert

Choose AAM Capital

Find out why investors choose us. Multi family investment options include Fannie Mae, Insurance, CMBS AND Portfolio Lending.

commercial@aamonline.com
Fax 423-443-4784