Debt is core to real estate the same way fuel is to the airline industry, yet firms don’t manage debt as actively as airlines manage fuel.
Sure, everyone shops the quotes on the front end and some run refi scenarios throughout the year, but it’s really a secondary objective. Most firms treat it like a snapshot decision at the closing decision, and then when it comes time to sell or refi.
Because rates change every day, so the minute you run the analysis it’s already stale.
Because cashflows change every month, your analysis becomes stale very quickly.
Because chasing the next deal is more exciting.
Because it’s a pain!
Your team already has a ton on it’s plate. Now they need to go get the current balance, pull the docs to review the language around your prepayment penalties and calculate it, then get soft quotes from lenders…and then run the analysis.
And then the boss asks for a slight tweak to the analysis and everyone goes off and starts all over again. That’s just the snapshot today – is there an optimal time to refi in the next year? Or over the next 3 years? What if a tenant leaves unexpectedly?