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What’s Hot in Real Estate?

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What’s Hot in Real Estate?  Opinions vary as to factual sources.  Many “official”-type people are sure the worst of the residential market collapse is over and now it is time for commercial to flop.  If crystal balls were real, then opinions would be more than just that.  There will always be people that predict what is next and they will look at history to make that prediction.

Will the commercial real estate market actually collapse?  I do not think so personally, but I do expect that there will be a great deal of commercial foreclosures, note (mortgage) sales and value adjustments based on income.  In the past few months I have been busy with listings – not only receiving calls but actually closing sales.

So what’s hot?  Foreclosure purchases have always been of special interest and I feel that they are only of greater interest now because there are just so many out there, and even more to come.  I am very fortunate in that I have developed close relations with various banks and will be the listing agent for many commercial properties.  It seems that over the next few months there will be a good amount of foreclosure properties to choose from; at least that is what I hear from the banks.

Many buyers are after 40 – 50cents on the dollar with great income and the best location.  I have not seen those and believe that they ever existed, they are long gone.  Anything which sells now for 50 cents or less is a substantially distressed property (which some buyers still want).  Banks are not letting properties go for pennies but they are letting them go.

In other cases, when the bank is either unable to does not wish to pursue a foreclosure, they will offer the note for sale.  This often at a discount but the size varies.  The problem with purchasing the note is that the buyer becomes the bank and often will inherit all the issues.  Depending the property, this is not such a bad arrangement. The process can be long and arduous but as a broker, it can be just as rewarding.

Even in this market, I am finding investors as well as end-users who want or need a space of their own.  Investors who have been dormant for a while are now coming alive with cash and desire to purchase with loans (although the loans are 30% and high in LTV).  Companies that want their own building are putting down larger sums of money for the time being (unless they can obtain the financing they need).

The market is very much alive, it just looks a bit different right now.  From my chair, it is just as good if not better now; more buyers; more properties and great potential for value today and into the future.

If you have comments or questions, I would love to hear from you.

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