How To Get Commercial Construction Loan Financing – Even During a Dismal Economic Downturn

Just the other day, I heard a rather prominent commercial real estate mortgage industry insider (who wishes to remain anonymous) utter something like: “Sorry guys, no commercial lenders are making loans for commercial construction financing these days in this dismal economic downturn.” No wonder that industry insider wants to remain anonymous! He ought to because it seems to me that when executives start to parrot what they hear in the news media, they actually cause the doom and gloom that doesn’t really exist @ all before they proclaim it. Anyway, rest assured that you can get commercial construction loan financing – if you know where to look…

Perhaps where he comes from, commercial construction financing is hard to come by, but he was undoubtedly referring to traditional commercial real estate lenders. Now don’t get me wrong, conventional commercial lenders do have a solid rationale for being reluctant to provide construction loan financing: “In a down economy, lots of standing (existing) real estate sits vacant or unsold on the market. So, why the heck should we finance new construction?”

OK, we get their point, but there are still a lot of good solid new construction projects out there that need to be funded, and yours may just be one of them. If so, private commercial construction loan financing is where it’s at. Here’s what it is, why you may need it, and how you can get access to $250,000 to $500 million in the ideal combination of private commercial mortgage loans and up to 100% joint venture equity capital…

Private Commercial Construction Loan Financing Defined

First of all, let’s define what a commercial construction loan actually is. Private commercial construction loans are typically short-term interim recourse commercial loans from non-bank sources (e.g. private investment firms, individual investors, hedge funds, etc) to finance construction costs. In a typical case, the lender would advance construction funds to you as the builder at periodically at set intervals as the work progresses. By “recourse”, we’re referring to loans where the lender may seek to recover money in addition to real property that the borrow pledges as collateral in the event of a loan default.

Why You May Need Private Money To Fund Your Commercial Construction Deals

Perhaps the toughest issue that we as commercial real estate investors and owners face–especially within this challenging economy is locating financing when our credit scores, resumes, and/or financial statements are less than stellar. Private lenders and equity capital financiers can work with you to find or devise the ideal combination of debt & equity to finance your commercial construction project. Plus, these private capital sources have much greater flexibility, can offer you more creative financing options, and they can fund your deals with eye-popping speed and efficiency.

How You Can Access Private Commercial Construction Loans and Equity Capital Financing

Based upon the information that you have just read, if you feel that either private commercial mortgage finance or private equity capital finance sources are appropriate for your new commercial construction real estate ventures, please just keep in mind that you certainly can get access to the most appropriate form of commercial construction loan financing for your business – as long as you know just where to look for it.

Charles Emery is a Commercial Real Estate Finance Consultant with Radiant Properties LLC, a Philadelphia, PA based real estate investment and commercial real estate finance consulting firm. Prior to his entrepreneurial endeavors, Charles worked as a Commercial Credit Analyst at a large Philadelphia area regional bank where he provided Commercial Lenders with financial, business and industry analysis, upon which those Loan Officers based their commercial loan funding decisions. He also performed marketing & sales calls along with new business prospecting as part of his overall commercial lending related work responsibilities.

The ABCs of Effective Constructive Feedback

Giving effective constructive feedback does not have to be difficult if you keep in mind the following ABCs:#1: Effective constructive feedback is appropriate in time and in place.It is important to choose an appropriate time and an appropriate location to give constructive feedback. Feedback should be given timely, and at an appropriate time. Timely constructive feedback occurs within a few days of the observed behavior. This way, the incident will still be fresh in your mind and in the mind of the person with whom you will be speaking. If you wait much longer than a few days, there is a good chance that the person will have forgotten about the behavior. Also, the further removed you are from the date of the incident, the more inclined you will be to lessen the effect of the incident, i.e. “What Bob did wasn’t really that bad. I was probably just overreacting to the situation.” The worst thing you can do as a supervisor is to not address the issue until the employee’s annual performance review. Not only is this unfair to the blindsided employee, it also casts you in a bad light as your supervisors will wonder why you neglected to address the issue when it first arose.Next, you’ll need to arrange an appropriate time to discuss the issue. Find time in your schedule to allow both you and the other person sufficient time to hold a productive conversation. Five minutes here or there or the fifteen minutes between meetings will not be enough time to sit down and talk. You don’t want the other person to feel rushed or to feel that there is no time for him or her to respond to what’s been said. We’ll discuss a bit later the importance of follow-up.Location, location, location. When giving constructive feedback, location is just as important a consideration as when purchasing real estate. Constructive feedback should be given in private.Use your office. If you work in an open cubicle setting, ask to use someone’s office or use an empty conference room or meeting space. The idea is to provide a private and confidential environment for your conversation. Additionally, as a general rule, it is not appropriate to give constructive feedback in front of others. Give your employees and co-workers the respect they deserve by discussing work performance issues in a one-on-one conversation. No one likes to be thrown under the proverbial bus in front of his or her colleagues. Not only is this unprofessional, it embarrasses the employee and makes those co-workers who are present uncomfortable.#2: Effective constructive feedback focuses on the behavior, not the person.We all have our own personality flaws, quirks, and idiosyncrasies. Keep in mind when giving your constructive feedback that no one is perfect, including you. Try to refrain from focusing on the person’s shortcomings. Remember we all have them. Instead, focus on the behavior in question. When you focus on the person’s behavior and how it is affecting the workplace as a whole, he or she is less likely to get defensive and will be more likely to be receptive to your message. For instance, suppose one of the members on your team consistently misses deadlines and, as a consequence, causes other members of the team to fall behind in their schedules and meeting their commitments. Your constructive feedback should focus not upon this person’s utter lack of effective time management skills. Rather, your feedback should focus upon how on x occasion, the person’s failure to complete his or her tasks by the prescribed deadline negatively impacted the rest of the team in a, b, and c ways.#3: Effective constructive feedback is contextual.Have you ever gotten into an argument with your significant other over what you thought was one issue only to have the argument disintegrate into a shouting match rehashing issues you thought were resolved months ago? Or, perhaps the person brought up something that happened over a year ago that you are now hearing for the first time. You thought to yourself, “Now why didn’t he tell me that my leaving the cap off the toothpaste bothered him a long time ago???” Let’s switch gears to see how this same dynamic plays out in the workplace. You are the supervisor of the customer service department. You’ve asked John to come and speak with you about complaints you’ve recently received about his customer service. Your constructive feedback should be contextual in that it addresses the specific issue before you, namely concerns about the quality of service John is giving to his customers. Now would not be an appropriate time to discuss how John was 45 minutes late to the last department meeting or how he doesn’t contribute to the weekly donut kitty yet helps himself to two glazed Krispy Kremes every Friday morning. Going back to the first quality of effective constructive feedback, that it be appropriate in time, alleviates any contextual problem. When you address and resolve issues in a timely manner (within a reasonable time after the behavior is observed), there is no need to dredge up past wrongdoings because, presumably, they have already been addressed and resolved.#4: Effective constructive feedback is descriptive.One of your goals in giving constructive feedback is to identify an area in your colleague or employee’s work performance that could use improvement. Therefore, general comments about working harder, being a better team player, or other euphemistic clichés are not particularly helpful. After all, how can I, as an employee, begin to address and correct an issue if I am not clear which behavior I am engaging in is unsatisfactory? When giving constructive feedback, endeavor to be very specific. Compare and contrast the following examples.Manager:Paul, I need you to start being a better team player.Paul:I am not sure what you mean. I contributed over 120 hours to the Manheim project this month and worked with Paula, Christine, and Scott to make sure those proposals went out to the client on time. I worked late every night last week and came in on the weekend to help Christine finish the reports for the Donaldson project. How am I not being a good team player?versusManager:Hello Paul. Thanks for your work on the Manheim project. I appreciate you sacrificing your weekends to get those proposals out to the client on time. I wanted to talk with you today, however, because I have some concerns about your tardiness. I noticed that you arrived late yesterday and again today. I am concerned because you missed some very valuable information during the first part of this morning’s department meeting. The rest of the team and I really value your input and would have welcomed your perspective on the Donaldson project.Paul:Yes, I’ve been meaning to speak with you about my schedule for this week. My wife is six months pregnant and I’ve had to take her to her prenatal checkups and sonogram appointments. I meant to tell you last week, but I got so preoccupied with the Manheim project that it completely slipped my mind.#5: Effective constructive feedback uses examples.Along with being descriptive in giving constructive feedback, it is also a good idea to give examples of the person’s behavior that is at issue. For instance, let’s suppose you have a co-worker who routinely monopolizes the discussion during staff meetings. In your discussion with your co-worker, you would want to point to a specific instance where he or she was monopolizing the discussion and then tie that in to how that negatively impacted the others in the group. For any piece of constructive feedback that you give, you need to be able to give concrete examples of the person’s behavior.#6: Effective constructive feedback invites follow-up from the recipient.After you have given constructive feedback, you need to allow the other person to speak and be willing to actively listen to his/her viewpoint. Good communication is always a two-way street. There should be a free exchange of ideas and a reciprocal give-and-take of information. Demonstrate by your verbal and nonverbal communication that you are open to listening to the other person’s response. If you hastily call someone into your office, spout off a laundry list of their “bad” behaviors, and hurriedly dismiss him or her without affording an opportunity to respond to what you have said, what exactly have you accomplished? You’ve learned nothing about why the person engaged in the behavior at issue.#7: Effective constructive feedback is goal-oriented.Constructive feedback not only identifies an area of concern, it also proposes solutions that can be implemented to address that area of concern. After all, it wouldn’t make any sense to identify an area for improvement and stop there. For instance, if the basis of your feedback was the other person’s tardiness to staff meetings, the two of you may want to set a goal of arriving ten minutes early to future meetings. This, of course, is a simplistic example, but you get the point. After your initial meeting, follow-up with the person at a mutually agreed upon time to discuss his or her progress toward meeting the goal.#8: Effective constructive feedback is helpful.The recipient of your constructive feedback needs to know how to improve his or her work performance. Be prepared to offer practical advice and suggestions as to how the recipient can do just that. You might recommend that your employee take part in an upcoming training session on customer service. Or, you may suggest that he or she take a technical writing class at the local community college and arrange for your company to reimburse the employee for the cost of the course. You get the idea. Whatever the area of concern may be, don’t simply stop at identifying it; offer practical and easy to implement solutions to address it.#9: Effective constructive feedback is given with integrity.Put yourself in the shoes of the person sitting on the other side of your desk. If the roles were reversed, how would you like to be treated? Observe the “golden rule” policy. While it is important to be honest in your constructive feedback, that doesn’t diminish the importance of showing tact and being respectful. For a quick litmus test to decide whether to say something, ask yourself if you’d either say it directly to your mother or in the presence of your grandmother.#10: Effective constructive feedback is just.Please be fair. Policies should be enforced equally across the board. Your expectations for excellence ought be the same for everyone, regardless of your personal feelings about them. Address individual issues on that basis. If you notice an issue common to many people in the department, address these globally during a staff meeting or in a memo.Being mindful of these attributes should assist you in giving constructive feedback more effectively. Remember… feedback on work performance should lead to solutions, not to the creation of more problems. Happy working!Copyright © 2010 MARIGOLD CONSULTING. All rights reserved.

How the Recession Is Affecting the Commercial Construction Industry

The ‘Great Recession’ theoretically lasted about 18 months, from 2007 to 2009. Recovery has been agonizingly slow in many industries but we are now in 2015 and the construction industry is more rapidly shrugging off the residual effects of the recession.How Bad Was It?Even though construction industry is cyclical and recession typically follows a boom period, nothing could have prepared it for the harsh and widespread reach of the recession:

Residential: Homeowners defaulted on homes and others delayed buying homes, leading to a glut of residential real estate languishing in realtors’ inventory.

Commercial: Commercial construction also was hard hit, severely impacted by the federal budget sequester and eventual-but-temporary shutdown, followed by scaled back government spending, and sharply reduced lending practices.

Institutional: Institutional construction remained stagnant, affected by the same limitations and funding problems that the commercial construction sector faced.
How Were Construction Workers Affected?Nevada, California, Florida, and Arizona are typically areas with plenty of construction work. But the recession changed that:

Nevada employed an estimated 146,000 construction workers at the peak of its construction boom. That number was reduced by 59 percent.

Arizona’s construction employment dropped 50 percent from its pre-recession industry peak.

Florida was close on the industry-related unemployment heels of Nevada and Arizona, losing 40 percent of its construction workforce.

California fared better but still recorded a 28 percent drop.

According to the U.S. Bureau of Labor Statistics (BLS), approximately 2.3 million construction workers lost their jobs in the recession (nearly 30 percent of the total number of lost jobs).

The overall construction industry has an estimated 1.4 million fewer construction workers in 2015 than it did in 2007.
The Construction Outlook in 2015 and BeyondHappily, the U.S. and its construction industry continue to move away from the harshest effects of the Great Recession. Industry observers expect to see these improvements:

Non-residential construction: picking up and looking more solid, especially with the expected 2.6 percent real GDP growth in 2015. This sector may rise by 8 percent with growth in office buildings, hotels, and industrial facilities.

Single family housing: expected to increase by 11 percent in the number of residential units, thanks to easier access to home mortgage loans.

Manufacturing plant construction: will probably drop about 16 percent after huge increases of 2013 and 2014.

Institutional construction: expected to continue its moderate upward trend and increase 9% over 2014 results.

Residential construction: called the potential ‘wild card’ of 2015 because of rising interest rates. Existing home sales may climb toward 10 percent.

Public construction: growth will remain low due to ongoing federal spending constraints. However, transportation spending is expected to grow by about 2.2 percent.
Ironically, construction workers may not be rushing to return to new jobs. Many left the industry altogether, retraining for other employment.Texas and North Dakota both show significant increases in construction employment. North Dakota now needs to recruit construction workers. Texas’ construction employment is up 10 percent, nearing its pre-recession peak.Economists don’t expect the construction industry to return to its peak level (2006) until 2022 or later. However, the BLS anticipates that the fastest-growing jobs now and 2022 will be in healthcare and construction.So while the Great Recession did a considerable amount of damage to the overall economy, individual incomes, and morale, 2015 and beyond are looking considerably more favorable in the commercial construction industry.