$33M Closed. What These Deals Taught Me About Leverage

In commercial real estate, there’s one thing I’ve learned above all: it’s not just about the numbers you’re looking at, but how you’re leveraging those numbers. I’ve just wrapped up $33M in three incredibly diverse deals—a build-to-rent project, a mixed-use development, and an industrial property. While each deal had its own set of challenges, they all taught me some pretty powerful lessons about leverage—and what truly makes a deal work.

Here’s the thing. Leverage is more than just borrowing money. It’s about borrowing the right amount, in the right way, at the right time. And when you get that balance right, it opens up opportunities you might not have seen before.

Leverage Is About Strategy, Not Just Debt

When people talk about leverage, they often make it sound like it's about taking on as much debt as possible to maximize your returns. But here’s the truth: it’s about being strategic with your debt. I learned this firsthand on the BTR deal. We needed a high leverage, flexible debt structure that could adapt as the project moved from construction to leasing. And that flexibility? It came from choosing the right term and lender—not just chasing the lowest rate.

In the industrial deal, the goal was stability. The borrower wasn’t looking for a quick turnaround. They wanted a long-term asset that would fit into their larger portfolio. In an unpredictable and volatile interest rate climate like today, we structured a deal with a low fixed rate, lower leverage, but a longer term. The peace of mind it gave them was priceless, and it allowed them to focus on their growth without worrying about refinancing.

The key takeaway here? Leverage isn’t about how much debt you can take on. It’s about structuring that debt to fit your vision.

Rate vs. Term: The Real Difference-Maker

Here’s where things get tricky: everyone loves a good rate. But what people often forget is that rate is only part of the equation. If you’re not thinking about the term, or the lender’s ability to execute, you’re wasting your energy.

For a recent perm debt placement, we could have gone for an average rate for a shorter term, but that would have put a lot of pressure on the borrower early on and with high costs for extensions and exit fees. Instead, we decided on a lower fixed rate but a much longer term—15 years, with rate adjustments every 5 years. It wasn’t the shiny, easy choice; hence the gamble on interest rates, but it was the right one. It gave the borrower more breathing room to have a fixed monthly debt service with a clearer path for long-term success. The reality of a 15 year term is that the right lender can chop it up into 5 year increments allowing the borrower to benefit from a downward rate adjustment, short term prepayment spread maintenance, or a clean exit at par. 

When it comes to commercial real estate, sometimes the lowest rate isn’t the best deal. The term and the lender institution can be the real game-changer, giving you the stability you need to ride out market shifts and secure a better outcome down the road.

The Power of Tailored Debt Strategy

What’s really powerful about these deals is that they weren’t just about securing financing. They were about matching the financing to the bigger picture. It wasn’t about a generic, cookie-cutter solution. It was about understanding each borrower’s goals and creating a tailored strategy to help them get there.

For the industrial property, it was about giving the borrower room to grow, without the stress of needing to refinance in the next few years. For the mixed-use project, it was about securing the right balance of lender, rate, and term, so the borrower could move forward with confidence and stability.

That’s the magic of leverage—it’s not just about securing capital. It’s about finding the right structure that works for the unique needs of the deal.

Ready to Rethink Your Leverage Strategy?

These deals have been a great reminder that leveraging debt is about more than just crunching numbers. It’s about strategy, vision, and finding the right fit. If you’re looking at your next deal and wondering if you’re getting the most out of your leverage, I’d love to help.

Let's run the numbers and build a strategy that fits your unique needs. Together, we’ll make sure that the financing is just as powerful as the vision behind your deal.

DM me to add your deal to the pipeline – we’ll run the numbers.