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A
Active Principal
HUD considers an active principal to be a person who is in the role of a consultant who has the expertise and experience that the borrower might be lacking to ensure quality management or completion of the project. The active principal is required to have an ownership...
Pros
Cons
1. Getting the Rent on Time
1. In Bed with the Government
2. Lowest Vacancy Rates
2. Annual Inspections Costly
3. Unit Must be Maintained
3. 1st Rent Payment Delayed
4. Higher Rents
4. Damage Payments Delayed
5. Pre-Screened Tenants
5. No Security Deposit
6. Unit Inspected – Declared Safe
6. Tenants Need Mothering
By Terry Painter/Mortgage Banker, Author of The...
By Terry Painter/ Mortgage Banker
Member of Forbes Real Estate Council Author of "Encyclopedia of Commercial Real Estate Advice" – Released May 2020
What is flex space? Flex space is industrial space that starts with non-air conditioned warehouse space in the back and an office or showroom in the front. You have the flexibility to “flex” with putting small or larger spaces into the building...
By Terry Painter, Mortgage Banker
Member of the Forbes Real Estate Council
What is a master lease? What are the benefits and how is it used?
A Master Lease as it pertains to commercial real estate is a financial instrument that allows a buyer/lessee to lease the property with an option to purchase it at a later date. The lessee has equitable title, not legal title which allows the lessee...
By Terry Painter, Mortgage Banker
Member of the Forbes Real Estate Council
First, let’s define what a capital stack is. Pertaining to commercial real estate, a capital stack refers to the differing layers of money resources that are involved in buying and improving a project having to do with real estate. The differing layers have to do with the amount of risk in the investment end of the...
By Terry Painter, Mortgage Banker
Member of the Forbes Real Estate Council
What is the difference between a non-recourse loan and a recourse loan, and which is best for you?
A Non-Recourse Loan is made to a single asset ownership entity like an LLC. If the property fails, the lenders only recourse is to take the property back. A Recourse Loan is made to an individual(s) required to sign a...
With a non-recourse loan, no personal guarantees are required. In the case of a default, the lender can only take possession of the subject property. Thus, the borrower’s personal assets are not at risk.
Why You Should Join the Non-Recourse Loan Club?
Congratulations! If you are reading this and wanting to learn more about non-recourse financing, then you have the opportunity to join one of the...
A rent concession is a discount in the rent used by property management companies to influence prospective tenants to lease a rental property when rental unit supply is larger than rental unit demand.
In your neck of the woods, rent concessions are minimal due less than 5 percent vacancy. To get absorption going quickly, some larger, just built apartment complexes are offering a half month’s...
May 2025 Cap Rate Report
Cap Rates Slightly Compressing, Office Properties Still Losing Value
May 15, 2025
Multifamily
According to Marcus and Millichap, Multifamily Cap rates compressed 7 basis points (bps) during the first quarter of 2025. This trend is expected to continue at least through Q3 of 2025. According to CBRE, Multifamily cap rates on value add multifamily properties...
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