Would you say it is a good time to invest in commercial Real Estate or should we wait?
I've been interested in Real Estate for quite a while but never got off the fence due to the unsteady market. I'd love to hear an opinion of where this market is going whether residential or commercial.
The theory is buy low and prices are about as low as you might expect. Land usually always rises in value.
The future looks risky and could completely collapse. But then money would be worthless anyway and one can't really allow for that except by buying gold, stocking up on weapons and food.
Land well selected has always been a good investment over time, just don't get in over your head with short term low interest mortgages.
Not a recommendation just an opinion. I'll answer your question with another. Would you rather pay a discount or premium when buying property?
There's a well known saying in the financial world and I paraphrase "Buy stocks when all the Brokers are jumping out the windows & Sell stocks when everyone thinks the NYSE or Nasdaq will never correct." A little different than the RE Market but in a sense the same concept.
I think we all like to buy anything for a discount and right now even though the RE market is coming back with a vengeance, especially here in California, it's still considered undervalued.
The market wil continue to go down as sales are still significantly trailing new homes under construction. I would stay on the sidelines until we start seeing signs of bottoming out of the housing market. In terms of specific geography, hard hit areas like Florida and Las Vegas are predicted to continue their fall but there are better oportunities in California.
Keep in mind that while related, the residential and commercial real estate markets are entirely different animals. For one thing, supply and demand factors can be quite different for the two real estate catagories. For two, commercial real estate buyers have deep pockets, unlike many home purchasers, so the potential is there to support commercial real estate in markets where there is sufficient demand, even in slow growth times.
I would say given the low interest rates, it is a good time to buy commercial real estate, as long as you are buying in a market that is not overloaded with empty commercial real estate.
I do think it is a good time, with a few reservations. Prices are generally lower than I have seen them in a long time. Many properties are stable and well-performing. Lenders in most areas have money to lend at historic low rates, but their lending criteria are more stringent than they have been in the past. Alternative investments that offer yield without outrageous risk and volatility are very hard to come by.
That said, I think there are types of commercial property investments that continue to be dangerous. Some markets are still highly challenged (Las Vegas, Detroit), and likely to remain so. Some property types have been hit harder than others, and will continue to echo the uncertainty of the economy (hospitality). Leasing is still a challenge, so properties with high vacancy can linger with that vacancy for a long time. It's still a tenant's market in many areas.
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