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The 10-year yield continued its upward trend this past week.  I figured it was time to take a look at the graph over the last five years.  It is interesting to see that the yield has increased over 1.6% since the July 2017 low.  We are now at the high once more; and I suspect we will continue the upward trend until some surprise disrupts the markets.

Most have observed the residential market slowing down a bit; and I am now seeing cap rates moving up slowly in response to the rising interest rate market.

AREAA/CCIM Event Review:

This past week I was part of the first collaborative event between AREAA Silicon Valley and the Northern California CCIM group.  The event’s main focus was on overseas clients investing in US real estate.

I moderated Panel 2 which focused on the tax, legal and lending issues involved with these investors.  It was quite enlightening as there are a lot of complexities when working this market.

We were fortunate to have Sblend Sblendorio of Hoge Fenton, Ken Harvey and Jerry Yu of Moss Adams, and Stella Guinto of Zephyr Real Estate.  These professionals gave of their time and really explained many of the pitfalls that need to be avoided.

The main takeaway was that real estate professionals need to build a team when working in this space.  The potential penalties from failing to file proper forms are extremely onerous.  What was clear is that the legal and accounting teams that specialize in this area are quite unique.  This is where spending money on the front end for planning is critical towards the long-term financial success of the investor.

I did find it somewhat entertaining when one of the panelists thought I was like a banker.  We chatted more; and then I explained that I am more of an agent looking out for the best interests of the client.  I further explained that my role is to determine the client’s financial objectives, locate the financial institution that best serves that need with the most efficient loan terms, and then manage the chaos to ensure the deal gets done.

This is contrast to the client going in to their favorite bank that often does not have the best terms.  The client is vulnerable because they really do not know which financial institutions best fits their overall needs.

Note it was clear to me that I need to work on my messaging a bit more!

Anyway, thank you to those that attended; and I welcome your comments on how to make these events even more beneficial.

Investments Opportunities for Purchase with Strong Cash Flow:

Back on the January 15th update, I wrote about “Creating Residential Listings Using Commercial Opportunities.”  Each week,  I am presenting some of those investment opportunities to better educate all on what is actually available.  Note that these are all Single Tenant Net Leased properties that have listed in about the last 10 days.  In addition, I assumed a 5.25% loan with 50% down.  This is just a small sample of what is actually available.

If you assume investors in the Bay Area are getting a cash flow of 3.5%, then you can see the potential improvement with these properties above.  This approach is great for the investors desiring increased cash flow, an opportunity to get out of daily property management, and/or taking the challenges of rent control off the table.  Should you wish to discuss any of these or others, then give me a call.

That’s it for this week.  As always, feel free to give me a call with any of your strategic financing needs.

Articles of Interest:

NREI shared “Tech Job Growth Continues to Create Demand for Office Space.”

Forbes shared “Five Lessons From A Real Estate Joint Venture Gone Bad.”

The SJ Mercury News reported “Bay Area real estate gains highest in country since recession.”

The SJ Mercury News also shared “Bay Area’s runaway housing market taps the brakes. Will the lull last?

NREI shared “The Top Countries Investing in U.S. Commercial Real Estate.

Note between Canada and China, there were about 1400 properties that were purchased.  For those of you working with clients that immigrated from abroad, it is best to discuss the potential of having their foreign connections investing here in the US.

NREI also shared “What Institutional Investors Want in this Stage of the CRE Cycle.”


Type Rate Fixed Term
Apartments 4.525% – 5.130% 3 to 10 year (30 yr amortization)
Commercial 4.835% – 5.430% 3 to 10 year (25 yr amortization)
SBA Lending Call for Options Call for Options
SV Commercial Lending