By: Jerry Hall, CCIM
Now may be the most opportune time to acquire investment real estate. All of the pieces of the Commercial Real Estate puzzle are starting to align – reasonably priced properties are on the market, loans are being approved, and the U.S. Gross Domestic Product (GDP) is on the rise. I have been advising my investors to seriously look at the market now!! Sitting back and waiting for the market to hit the absolute bottom will have you entering the game late. Every other investor, local and institutional, will be there competing against you in a feeding frenzy and you will most likely get caught up in a bidding war, thus paying more for properties.
I am asking my investors to step back and analyze the market. According to Real Capital Analytics, the third quarter of this year was “unquestionably the strongest so far in 2009, with $12.5 billion in volume, continuing the sequential quarterly growth from Q2 even though year-over-year comparisons are still broadly and materially negative. All property types (except industrial) showed positive growth in transactions over Q2, with office up an impressive 85%”. Serious investors are just now starting to appear. Properties are being priced much more reasonably and there is less of a gap between what sellers are willing to sell for and what buyers are willing to pay.
Along with the realistic pricing, commercial funding is becoming available if the investor has adequate funds for a down payment. Gone are the days of needing only 5-10% down. Banks are looking for more of a down payment from investors. You can expect to have a down payment of anywhere from 20-50% of the purchase price.
Earlier this week, the U. S. Commerce Department released GDP figures that showed a 3.5% growth in Q3 – the fastest pace in two years. This suggests that the recession is coming to an end and, with this confidence booster, investors will start trickling back into the commercial real estate sector in the coming months.
All the pieces of the CRE puzzle are starting to fall into place, making this a perfect time to invest in commercial real estate and come out a winner.
Take advantage of this once in a lifetime opportunity and contact me today to learn more about the properties that are available in the market!