Andres Aristizabal

Wire fraud - someone was asking me a little while back for a post relating to wire fraud. I’m working with an individual at a title company at the moment for a deal we’re working on, and thought that I would share the wire fraud warning that she has in her signature block (found it helpful). ⁣
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The four steps are meant to help prevent wire fraud, and were outlined as follows:⁣
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1.) Call, don’t email: Confirm all wiring instructions by phone before transferring funds. Use the phone number from the title company’s website or business card⁣
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2.) Be suspicious: It’s not common for title companies to change wiring instructions and payment info⁣
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3.) Confirm it all: Ask your bank to confirm not just the account number but also the name on the account before sending a wire⁣
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4.) Verify immediately: Call the title company to confirm the funds were received⁣
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I’ve worked on deals in the past where someone from the “title company” is looped into a settlement statement/closing chain. Wire fraud is very real my friends, stay alert! ⁣
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📸:

The only certainty in life is death and [property] taxes. ⁣
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Property taxes are based on an assessed value, and if a property is reassessed that means property taxes are being based on a new assessed value. In a majority of cases the reassessed value will be higher than the previous assessed value. That means that, for example, instead of annual property taxes of $100k/yr (as shown in last years tax bill/TTM) they would now be $300k/yr. ⁣
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The timing of a reassessment, and/or the trigger for a reassessment, is county dependent. Some counties reassess at sale, others reassess every year, etc. ⁣
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Some sponsors try to avoid reassessments through entity sales. An entity sale is basically buying the entity that holds the property in order to avoid having to record a new deed. The idea is that this will keep a reassessment from being triggered at sale for counties that reassess when there is a change of ownership. ⁣
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I have yet to find a situation where appraisers won’t account for a reassessment in taxes, regardless of an entity sale, but apparently it was the norm in OH up until not too long ago.⁣
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I’d be curious to know if there are currently any markets where an entity sale prevents an appraiser from accounting for a reassessment. If you do, I’d love to know what state/market in the comments below!

Part 2:⁣
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The rate cap being purchased will likely be for the typical length of the initial bridge loan term of 2-3 years (initial term does not include extensions). That said, rate caps are a hedging mechanism and cost more when they cover a) a larger loan amount, b) a longer term, or c) a lower strike. If we focus on b) for a second we could see that a 3 year rate cap would naturally be more expensive than one for 2 years. Many of the sponsors for 3 year loan term requests, from what I’ve seen, will go back to the lender and request that the rate cap cover two years with a waived extension on the third year of the loan term (i.e 2+1+1+1 instead of 3+1+1). That way they aren’t paying the higher cost of a 3 year cap (coverage for third year, given uncertainty & other factors, seems to cause a significant jump in cost. Sometimes double cost of years 1 and 2 combined). Since the extension fee and requirements are waived for the third year what you really have is a 3 year loan term before any extensions that have extension fees & extension metrics that need to be met.

If you want to learn more about rate caps the Chatham website does a great job of explaining and providing information. They also have a rate cap calculator!

Hey guys! It’s been a little while since I’ve posted but I’m working on the lenders side now. I wanted to make a two-part post (was too long to fit into one) regarding something that I’ve been seeing quite a bit of recently: Rate caps 🧢 ⁣
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Bridge loans are short term loans that are I/O in nature (interest only). These loan are going to be on a floating rate as opposed to a fixed rate (meaning you won’t be paying a fixed amount for mortgage payments). One way to hedge against rising rates on a floating loan, especially in an environment with rising interest rates like the one we currently find ourselves in, is by purchasing an interest rate cap. A rate cap essentially keeps the interest rate from moving above a certain amount over the rate at closing, and chances are you’re lender might require you to get one from a reputable company (i.e Chatham). ⁣
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There are basically three aspects to a rate cap, these are: notional (amount), strike rate and term. The notional would essentially be the loan amount that is being covered by the rate cap. Strike rate could be, say, 2% which means that there will be a ceiling on the interest rate of 2% (strike) plus the lenders spread (their spread + index floor). Term will be length of coverage (I.e 3 year term for a 3 year loan term).

Shout out to my now golden ram graduate 👩‍🎓❤️⁣
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Very well deserved - love you!

Didn’t have this for the first 24 years of my life and had it for the first time last weekend⁣
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I don’t know who needs to hear this, but if you haven’t had banana bread pudding you’ve been missing out! 🍌