Alexander Siniavin's Blog -
Date Posted : 2010-08-03 | Category : Buying Investment Properties
The Tsunami of Commercial Foreclosure is well on its way...
You better be ready!
According to the experts in the industry,
Commercial foreclosures wave is promising to sweep through the nation with an overwhelming force and it has potential to bring our economy to another halt.
It is projected that 68% of commercial mortgages could go into default, which could mean that two thirds of all commercial buildings might go into foreclosure. This can cause as many as 700 additional lending institutions to collapse.
What does it mean for you, real estate investor? Unbelievable discounts on commercial properties that are often in great condition and generating positive cash flow. Confused?
Ok, let’s break it down. Most of the commercial real estate loans are done by smaller regional banks and many of these loans are short term loans with balloon payments. And just as residential real estate during the last decade or so, commercial real estate has experienced boom as well. This caused for commercial properties to be in some cases over valued and over leveraged. Sounds familiar?
Ok, let’s continue. Previously described set up for another round of financial disasters can turn into a potential gold rush for real estate investors. Here is how. Think back to residential foreclosures. As balloon payments for real estate loans are becoming due, owners will be forced to sell or refinance. With credit not being readily available the second option is not viable, so what are you left with? Right, sell. Now remember the 68% of commercial mortgages that are could go into default? This is the reason why. If you can’t refinance you have to sell or let your lender foreclose on the property. It’s a simple matter of supply and demand.
So here is what is anticipated to happen. An estimated value of 1.3 trillion dollars of commercial properties is expected to become due in the near future and with credit market being in the condition it is in now, chance of all these properties finding refi options are pretty slim to none. And slims are out of town, by the way. On the same token, selling a property most likely won’t be an easy task as well. Why? No credit available.
What does it mean for you?
[lxl] DEALS, DEALS and did I mention DEALS.
And guess what? No money down seller finance deals. That’s right your eyes are not deceiving you. You can find no money down seller finance deals. Check out this video to learn how easy it is.
