Residential and Commercial Real Estate Investing: Sunday Morning Thoughts 5 August 2012

Loan (Photo credit: Philip Taylor PT)

In our previous posts we shared an overview of the A, B, C’s of commercial and residential real estate investing, and the pitfalls of alligator investments.

Our next look is residential and commercial real estate investing, not versus each other, which means a real estate holdings portfolio would be more stable in any market, buyer, seller, or flat if both types of investments are included.

Currently residential real estate, in certain markets, is seeing some improvement, but with more foreclosures on the horizon, that may change in the very near future.

Commercial real estate is also seeing fluctuations which will benefit commercial investors.  The factors are, but not limited to:

Maturing loans

Mismanagement of the asset and its negative effects on NOI

Insolvency

An underwater mortgage, owing more than 100% of property value

So how does a private lender take advantage of all these factors?

By investing in purchase loans, bridge loans, rehab loans, construction loans new and completion, and/ or become a second mortgage holder, or investing non-performing and performing notes.

Whichever strategy is your preference being the lender in today’s real estate market is a safe bet to increase the rate of return on your investment.

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Related articles

• Angelo Gordon to Start Mortgage Fund for Property Recovery Bet – Bloomberg (bloomberg.com)
• California Real Estate Professionals Receive Training to Help Investors Take Advantage of Today’s Housing Market (prweb.com)

Was That The Recovery You Asked: Sunday Morning Thoughts 11 July 2010

Answer, NO.  Not all of it, there’s more to come.

We are in the midst of the recovery.  Currently the stock market is correcting itself from our past transgressions.  The stock market ending on an up for Friday is good but don’t be surprised on Monday when the market opens down but closes moderate.

This type of activity is normal in a stable recovery.  We are going to see many ups and downs, peaks and valleys in the stock market, the overall will be a slow movement up for the stock market.

At this time foreign Investors being squeamish towards the American stock market is with good cause because we are in an unstable time of the recovery.  One good push in the wrong direction, and we will be looking down the barrel of a long Depression much worse the one from the late 1920’s.  Many of our own American Investors are showing indecisiveness with jumping from stock to stock just for a moderate fluctuation in the price of the stock.

The investments showing growth from week to week are tangible assets such as gold and silver.  The current market prices have not been this high for a very long time.

Suffice it to say, a tangible asset is a good investment.  Real estate is also a tangible asset which has a lot of influence on the global economy.  Now is the time to make sound investments in real estate.  When this tangible asset starts showing strong signs of improvement it may be a long time before it will be this affordable again.

A Slow Steady Economic Recovery: Sunday Morning Thoughts 20 June 2010

First let’s start with a few tidbits that do not seem to have a reason in this posting.  But, these same tidbits will come back in future postings as their influences progresses in our economy.

Everyone seems to be welcoming the newly proposed flexibility of China’s Yuan exchange rate.  This will help lessen trade barriers with China.  At this point it is unknown whether this new flexibility will make the Yuan weaker or stronger than the US dollar; stronger is what Washington wants.

With May housing starts home building plunges but this is to be expected with the current housing glut.  With fewer new constructions starting this would help balance the current glut instead of making an even bigger issue of empty properties.  On the upside, there has been a rise in mortgage purchase applications last week, although it is too early to really tell the future impact.

The feds may keep interest rates low.  With the interest rates low more people will be able to qualify to purchase houses, even when the new reform bill passes the House and Senate.  Although it will be harder to acquire large lines of credit, the overall future impact will make it better for the economy.

One of the factors causing our current housing issues was caused by the average homeowner receiving interest only loans.  Interest only loans were for investors when they wanted to only hold a property for three to five years.  The loan was not suitable for families to purchase their dream home, because the reset of the mortgage payment would be greater than income, or they would not be able to keep up with the payments if the debts were too great.

The pace of the recovery may not be as fast as we all may have wanted, but slow and steady is better than fast as a rocket.  A rocket recovery would be unstable, going up fast and strong and plummeting faster and even stronger which in the short term would and only cause more problems such as a stock market crash.

A slow steady recovery will be a lasting solution to our current down economy.  While our economy is in a stabilization phase tangible assets are more attractive to investors.

Gold at this time is one of the most attractive tangible assets, but real estate should also be considered.

Why should real estate be considered if there is a current housing glut?

If nothing else time has proven real estate to be one of the best appreciating assets.  A down market is truly a buyers market; more houses are going into foreclosure, along with commercial properties, many of which are positive income producing commercial properties.