Transcript Generated by AI 00:00 Hey, 00:00 Mark Parkinson here with Park View, 00:03 and my Park view today is gonna be on a 00:05 very specific subject with a very specific piece of advice. 00:10 It's a piece of advice that I've been giving people for the last 20 years. 00:14 And that is that if you can take your financing to HUD, 00:18 go 00:18 to HUD. 00:20 Now, 00:20 some of you that are watching this may know 00:22 that these Parkviews are sponsored by Capital Funding Group, 00:25 which is the leading HHUD lender, 00:27 and you might say to yourself, 00:28 Well, 00:28 this is self-serving. 00:29 Mark's telling us to go to HUUD because they're being sponsored by a HUD lender. 00:35 That's not it at all. 00:36 Even if we didn't have a HHUD lender that was sponsoring us, 00:39 I would be giving the same advice as members of ACCA can tell you. 00:43 I've been giving this speech for the last 20 years. 00:45 In fact, 00:46 I sought out capital funding 00:48 because I feel so strongly about the need for you to get to HUD 00:52 that I wanted to make sure that a HUD lender 00:54 was a critical part 00:56 of Park Place. 00:57 OK, 00:58 why do I think it's so critical 01:00 that you get to HHUDD? 01:02 Obviously, 01:02 the way that most nursing homes are financed and assisted living facilities 01:06 is we got to put up a certain amount of money, 01:08 usually about 20%, 01:10 then we go out and we get a construction loan for 01:13 the rest of the project. 01:15 Typically, 01:15 that's with a local or regional bank, 01:18 and that makes a lot of sense. 01:20 We then get through the construction phase, 01:22 hopefully, 01:22 the project gets stabilized, 01:24 and then we have to figure out what our long-term financing is going to be. 01:28 Many people in the space, 01:30 instead of going to HUD, 01:32 first go to banks. 01:33 And again, 01:34 that continues to make sense because you can season some of your debt at a bank, 01:38 which will actually allow you to pull out some additional money later on. 01:42 But you get to a point in time with a bank where it doesn't make sense anymore. 01:47 And why is that the case? 01:49 That's the case because bank loans typically readjust 01:52 after 5 or 10 years. 01:55 Now, 01:55 for the last 40 years, 01:57 the fact that bank loans readjust after 5 or 10 years hasn't been that big of a deal. 02:02 Why? 02:03 Because interest rates have been going down. 02:05 The chart that you see on the screen shows that for the last 40 years, 02:09 really starting back in the early 80s. 02:12 We've had this long run of declining interest rates. 02:15 Most of you watching this video only know a business world 02:19 where rates are going down. 02:21 I'm old enough that I remember those really high rates. 02:24 I remember in law school, 02:26 CDs were paying 18%. 02:29 But 02:30 thankfully, 02:31 for the next 40 years, 02:32 rates went down. 02:33 So even when bank loans would readjust after 5 or 10 years, 02:37 it really wasn't that big of a deal. 02:39 Because typically the rates would adjust even lower. 02:43 What we, 02:43 what we've learned in the last 3 or 4 years is that rates don't always just go down, 02:48 they can also go up. 02:50 So you can see from the chart 02:51 that over the last few years we've had a dramatic increase 02:55 in interest rates in the United States. 02:57 The answer is to do what again I've been begging people to do for the last 20 years, 03:03 which is that when you can go to HUD, 03:05 do it. 03:06 It makes all the sense in the world. 03:08 Why? 03:09 Because 03:09 a HHUD loan is locked in for 35 years, 03:12 it doesn't readjust regardless of what happens to rates. 03:15 And oh by the way, 03:17 it's also non-recourse, 03:18 so you might be able to sleep a little better off at night. 03:22 Now people tell me, 03:23 I don't want to go to HHUD now. 03:24 Rates have gone up. 03:25 They might go down in the future, 03:27 and I'm going to wait until they go down. 03:29 I don't think that's a very good idea. 03:31 I'm not at all convinced 03:33 that even if the Fed lowers rates, 03:35 that interest rates will come down, 03:36 and we'll talk about that in a future segment. 03:38 And on top of that, 03:40 even if rates do go down with a HHUD loan, 03:43 you're able to refinance. 03:45 So, 03:46 you know, 03:47 the, 03:47 the, 03:47 the lesson here is very simple. 03:49 If you have a chance to get the HHUD, 03:51 Go to HUD. 03:52 If you don't and you're sitting there with a loan to readjusted for 5 or 10 years, 03:56 one of your very biggest risks 03:59 in some states, 03:59 even bigger than your Medicaid risk is your interest rate risk. 04:03 It is possible 04:04 for interest rates to go to 7 to 9% to 11 to 13%. 04:09 You might think I'm being an alarmist. 04:10 I'm not. 04:11 You look at the history of rates, 04:13 they can jump around pretty dramatically. 04:15 Bottom line, 04:16 if you have a chance to go to HHUD, 04:18 I strongly encourage you to do it. 04:20 Thank you very much for watching this Park 04:22 View and thank you for supporting Park Place.
