More Bad News coming down the Pipe??!!

I keep reading articles that say commercial Real Estate is headed for a major train wreck, unless the financing for commercial properties can be worked out. Some companies are at the door of foreclosure and more will be, as more and more of the debt becomes due and can not be paid.

Here are a few excerpts from the Wall Street Journal:

'With the commercial real-estate industry bracing itself for the onslaught of hundreds of billions of dollars in maturing loans, the Treasury is considering issuing rules that will make it easier for property developers and investors and their loan servicers to restructure debt, according to people familiar with the matter.
Tax rules make it difficult for borrowers who are current on their payments to hold restructuring talks with the servicers of commercial mortgages that were packaged and sold as bonds. This lack of flexibility was one of the reasons cited by the management of mall giant General Growth Properties Inc. for its Chapter 11 bankruptcy filing in April.
At present, developers and investors complain that only those who are delinquent can talk to servicers of these bonds, named commercial-mortgage-backed securities, or CMBS. But now the Treasury is considering issuing guidance that would allow servicers to start talking about ways to avoid defaults and foreclosures sooner, possibly at least two years ahead of the maturity date of a loan, these people said. The Treasury guidance, which could be released within weeks, would essentially enable loan-modification talks to take place without triggering tax consequences, these people say.' by LingLing Wei and Kris Hudson

Another article mirrors the same train of thought:
This is from a staff writer on the Mercury Sun in the Silicon Valley, George Avalos. This article is specific to the San Francisco, Oakland and San Jose Area.

'A vast auto dealership is empty in Oakland, visible from the freeway. In Pittsburg, a big housing development looms over a downtown street, unfinished and vacant. Hotels in Brentwood and Oakland are isolated behind cyclone fences. A mammoth residential development is idle next to the Caldecott Tunnel.

These troubled projects all are mute testimony to a financial malaise that first sickened the housing market and has now infected a broader part of the wheezing regional economy.

During a half-year period stretching from October through the end of March, mortgages totaling $784 million have slumped into default for dozens of commercial or development properties, including some huge residential subdivisions, in the East Bay.

"The commercial real estate shoe has dropped, and it is sitting on the ground crying," said Christopher Thornberg, partner and economist with Beacon Economics. "This is a huge problem."

This new downturn is also a significant challenge for the economy generally. Undeveloped or partially built projects stalled by foreclosures or bankruptcy can weaken economic growth in a community. Existing projects that are in default can fail to attract retailers or new businesses to a city. Buildings that are delayed in getting off the ground because of financial woes portend fewer construction jobs.

Bottom line: The recession that began with sales of individual houses, then spread to banks, retailers and automakers, now has commercial real estate in its grip. This relapse for the economy has arrived just when the fallen residential sector has begun to stagger off the ground.'

The article goes on the state 'Compared with the October-through-December quarter of 2008, the pace of commercial property defaults accelerated during the January-through-March quarter of 2009, a six-month analysis shows. The survey done by MediaNews compiled data on delinquent mortgages with loan amounts of at least $1 million.'

That is in just one region of California, Other articles report the same thing happening across the nation.

Now would be a good time to get to know commercial mortgage brokers and bankers and investors with deep pockets. Build the relationship's that will bring you deals and money. Investors are always looking for a good deal. If they can come in a save the day and save money, they will happy campers. You will be to, if you can put the deal together.

We at the National Association of Commercial Real Estate Property Scouts (NACREPS) have been training people from all walks of life to be property scouts. Check us out on the web at http://www.nacreps.org

Opportunites In Commercial Properties

It has been said that America is the land of opportunity. In residential properties that is so true. Low values means cash flow the investor that can buy the houses. Also, for the hard working American's that can afford to buy a house at a price where they can have the monthly payment they can manage. Not living on the edge, concerned about whether they make that next payment is one of them loses their job.

O.K., enough the house buyers, what about Commercial Real Estate? What is the wide, wide world of commercial is going on? Who are making the deals? Where are they making the deals? Why are they making these deals?

There is opportunity at every turn, you just have to look. Some are finding them the traditional way, through a commercial Real Estate Broker. Some are finding them through special asset managers in banks, or the short sale managers. Some are finding defaulted notes, or notes about to go into default. Some area's are coming out of the ground on new projects. Some buyers are finding projects that have run out of funds and need a white knight. Some banks are letting the notes float, hoping that the mortgagee will catch up the back payments and come current.

In some parts of the country, building cranes can be seen all over the place, other cities, not so many. Raw land and residential developments are definitely on the back burner except for the rare land banker, that is dug in for the recovery.

Some investors are motivated by the headlines of doom and gloom and do not take action. While the real investor is guided by the numbers and a few other factors. Do the numbers work? Will I make money it I make this purchase? Can I get this financed or backed buy securities and equity partners.

So at the end of the day, the commercial real estate market is an opportunity either way. You can get in and find a deal, money opportunity. Or you can wait on the sidelines and have a missed opportunity. As always, the choice is yours.

What are you going to do? Pass or Play.

If you do not have the money to play, you can sure learn a lot about commercial property by checking out http://www.nacreps.org and learn to scout for commercial property.

Take Care,
Ted

Is the Sky Falling??

Everyone knows the story of chicken little. The little chicken that thought the sky was falling on her, when she was hit on the head by a falling acorn. In today's economic climate, a lot of people are joining the band wagon, thinking the sky or building as fallen in on them.

True, time are tough, if you listen to the news for any length of time. We have new leadership in Washington and their actions do not seem to be making a difference except putting the nation under a greater burden of debt. Companies, small business owners, the workers in the plants and industries across the nation, as well as the home owners and renters are wanting debt relief.

The experts are predicting the start of the commercial down turn in a lot of metropolitan marketplaces. Some of the cities are already seeing it in the number of vacant retail spaces and big box stores, as major chains are closing their doors.

So is the sky falling or is this the time for doing your homework and finding the commercial deals that can be salvaged and help turn the economy around, buy creating jobs and cash flow.

The Wall Street boys have been waiting on the side lines for the last year or so waiting to see which way the wind was going to blow. They are still waiting. Some bankers are working with commercial notes that are in default and helping to get things sorted out. Some are not and as a result we have a foreclosures, climbing on the commercial side of real estate.

So if the commercial down turn accelerates, there is a good chance more and more property owners are going to need help. Who will be there to help them? Will you? Will a team of knowledgeable team of committed people be in place to help? Will the government help? Will the bankers help? Will investment groups help?

I know that there are people who scout for commercial properties on a regular bases. They are trained and work hard at finding the deals that make sense. They watch the market and keep an ear to the ground for possible deals everyday.

If you are motivated and committed to finding commercial deals. If you are interested in getting active in commercial property scouting, check out http://www.nacreps.org/

Till next time, enjoy life.

Is Now the Time to Invest??

Hey, I am back. Did you miss me? Just joking...
Took some time off to enjoy the family and life. There is more to life then blogging.

New president, new faces in Congress and the Senate, new spending galore, but to what end. Still lots of gloom and doom. Market tanking here, market tanking there, foreclosures up, bank failing, bad loans left and right. People losing their jobs, companies bleeding all over the street, going out of business, leaving the landlords and property owners holding the bag.

From talking to other Phoenix Commercial investors, they are looking forward to the turn down in the Phoenix Commercial marketplace. They are actively looking, they know that good deals can be had. When I talk to other investors and brokers in different parts of the USA, they to are looking to make deals, both on the buy and sell side.

While the Wall Street boys are standing on the sidelines watching to see which way the wind is blowing, they to are looking for good deals in the major metropolitan areas. They have been out of the raw land deals for the last two years, whether commercial malls, office buildings or new residential. Everybody is holding their investment dollars, but they to turn the page soon or stand to lose even more money because the money is not moving.

This is the perfect time to strike a deal, but you really have to do your homework and due diligence, for money is tight on certain types of commercial loans and private money will only move when the deal is vetted to the core, not based on a lot of speculation.

Investors are looking to find properties that cash flow or break even, that can be turned around with better management or taking care of the deferred maintenance. Or will cash flow, as they fix the building one unit at a time and make plans to convert to condo's for when the market turns around. Lots of plans and ideas. Certain parts of the country are building new apartments and office complexes.

So, go out there and find those deals, hook them up with investor's and let the games begin.

To find out more on Commercial Real Estate Property Scouting, check out http://www.nacreps.org and get in action.

Till next time.