Cambridge Realty Capital’s Senior Vice President of Origins/Operations and Asset Management Brent Holman-Gomez cautions senior living borrowers about the allure of “one-stop shopping” when it comes to loan products. Big institutions sell potential borrowers on the idea of convenience, being able to get all of your financial needs met in a single location, but this doesn’t always work in favor of the customer in every circumstance.
“The problem is that when all of your business is with one firm, particularly a depository institution, it can be very difficult to extract yourself,” Holman-Gomez admonishes. Great short-term bridge lenders aren’t always best for permanent loans, and an entirely different firm can be best to get a government agency commitment. When a financing option at another firm becomes available that is more favorable to a particular borrower’s needs, there may be numerous obstacles to get past with the borrower’s primary institution in order to access it.
“Financial institutions market themselves as being able to meet all of the needs of every borrower,” says Holman-Gomez. “When operating accounts where payroll, revenues, lines of credit and more are at the same institution that is your mortgage lender, the need to maintain that relationship can make it hard to pay off the lender and take a loan elsewhere,” states Holman-Gomez. “Additionally, the clerical tasks of changing where payments are made can take time to establish when you move away from the bank that holds the accounts.”
For senior housing operators who are already entrenched in a relationship with a big institution but aren’t getting all their needs met, Holman-Gomez has this advice: “Most banks are more focused on the deposits than the loans, so the relationship can remain healthy and dynamic beyond the mortgage. Further, your banker will be glad that you aren’t moving all of your business when you declare your independence to use a variety of creditors.”
As for what an independent lender like Cambridge Realty Capital has to offer, some borrowers are surprised to learn that Cambridge deals with the same loan products as the big banks. While Cambridge is best known as a HUD lender, it also offers conventional financing and bridge financing. Its rates and terms are competitive in comparison to the big financial institutions, and there is often more flexibility when it comes to a particular borrower’s unique situation.
Holman-Gomez also points out that Cambridge Realty Capital is an independent firm, just like the majority of its clients are. “When you deal with a company that has entrepreneurial roots just like your own business, you have an instant rapport that creates a kind of personal relationship that is difficult to develop with a large institution.”
It is more than merely refreshing, though, for independent, entrepreneurial senior housing companies to work with a like-minded, grassroots lender like Cambridge. Sometimes it is also a matter of surviving and thriving. “We have regularly seen big banks that offer all products suddenly shift directions and pull back their interest in senior housing and healthcare,” notes Holman-Gomez. “Sometimes they exit the business altogether. Borrowers with no other relationships can have difficulty if they have all their business with the one institution. Forging a diverse network of relationships with financial providers need not be regarded as a hassle, but rather savvy business practice. Big institutions can’t always be all things to all customers, and one-stop shopping may not be realistic.”