What Is Happening?
There is a line from a Beastie Boys song of the “Licensed to Ill” album (almost 40 years ago-crazy!) that has always stuck in my head, it goes, “Somethings going on and I’ll probably never get it.” I feel like that right now…..
Five (5) months ago when Silicon Valley Bank went down I got on the phone with all the banks in Georgia and asked them how they were doing. To a man or woman they all claimed they were strong and lending and I what I saw with my eyes confirmed it-I was getting deals done with local banks. Since then, stocks have rallied, inflation, (as the Government tracks it), has come down, hiring remains strong and the number of forecasters predicting a recession is quickly disappearing. YET, despite all this good news, these same banks have pulled in the reins on lending-BIG TIME. Investor deals are nearly completely gone at local banks and forget about cash out. I was talking to one higher up at a major mid regional and he said they have begun to call on their customers with lines of credit who are not using them and asking them to close them. I HAVE NOT SEEN THAT SINCE 2008. The banks are acting like a crash is coming-despite generally healthy corporate profits.
Meanwhile, the CMBS market (which crashed in ’08) is healthy and active. Much slower than before because few deals actually cash flow and pencil out but still healthy and even aggressively looking for deals. So what gives? I don’t know-like I really don’t know for sure. But banks, are acting skittish…and not just the banks that Moody’s downgraded last week, all of them are abundantly cautious…so just be careful. Look for opportunities but don’t bet your entire ranch just yet on a soft landing….be cautious but optimistic. Banks, like people, have been known to overreact but when this many banks act skittish, it is prudent to exercise some caution.
As with anything, I look for opportunities and the banks tightening has been good for my business as I am the place to go when the banks say no. We are up 50% this year and last week we had more leads come in than we have had since the middle of APRIL. WE ARE STILL DOING CASH OUT LOANS to 75% if the cash flow supports and STILL DOING INVESTOR LOANS. So if you are hearing more no’s than ever before from these banks, consider us as an alternative. We’ll look at any deal and tell you within a day or two exactly what we can do for you. So give me a call at 512-358-1511
Give me a CALL TODAY at 512-358-1511