Keys to understanding opportunities in real estate

By David Sherman | October 2, 2012 10:04 am as seen in http://www.pionline.com

Summary: The savvy commercial real estate investor knows that properties with stable, long term tenants that produce  reasonable (an amount determined by individual criteria) fetch top dollar. Other properties with slightly more risk (expiring leases, high maintenance, vacancy, refinancing needs, etc) are dirt cheap. The goal is to find the mispriced riskier properties, install new management and add significant value, and then sell as a safe investment for a nice profit. Investors are duplicating this process with properties from single family homes to skyscrapers.

Key Memorable Points:

Income is expensive, but bricks are cheap.

As traditional debt capital remains limited, new sources form.

A steady supply of overleveraged assets will continue to come to market.

Fundamentals have bottomed out in most major markets.

Mispriced risk creates attractive investment opportunities.

Read the full article at Keys to understanding opportunities in real estate

A. Joseph MarshallColdwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga

Another prophetic doom and gloom article: Commercial real estate heading for a deep freeze- Part 1 of 3

I am seeing a flurry of buying activity. Investment groups want income producing properties and they want it now at aggressive pricing. I was sharing this with an Atlanta financial advisor and jokingly said, "I think we're all trying to make a buck [create income streams] before the crap hits the fan and the fan breaks."

Only he completely agreed. His high net worth clients are all running for the hills and taking moves now to protect their assets. He then made a few comments about the coming real estate reality. I hoped he was being pessimistic, but here is an article that extrapolates many things he said. If all you're hearing is a rosy outlook, I invite you to read this article and the two future ones for an alternative perspective.

Key Quotes:

"Investing in property is very far from being a safe, one way bet."

"The "proceed with care" warning that should accompany any property investment applies through all stages of the economic cycle. However, it is especially true today. Healthy commercial and retail property markets require two things, namely a ready supply of debt financing and a robust economic environment. Neither of these conditions pertains at present in any major Western economy."

"Among the biggest negatives has to be the fact that as far as lending on property is concerned, there is now a credit crunch that is getting to be as bad as that which followed the collapse of Lehman Brothers in 2008."

"Property lending carries a substantial capital reserve requirement so it makes eminent sense for banks to pull out of commercial property lending, or to make dramatic cuts in the amount that they are prepared to lend. This is extremely bad news for the property markets since it is the equivalent of putting a "deep freeze" on the market."

The full article Commercial real estate heading for a deep freeze- Part 1 of 3 was written by Anthony Harrington, May 14, 2012.

A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga