Best way to invest money

I have had tremendous luck with real estate even with the “economy”

Everyone I talk to is always telling me to drop out and stop investing in real estate however I still think it
is best for me.

Every book I read is telling me that real estate is not the best way to invest money[/url].

Is this economy really pointing that way?

Why do what everyone else is doing? they are all hurting. If you are doing something that is working for you why even ask for what others are thinking. personaly I don’t think we are out of the rut yet, but I do believe its not too long before we are. Keep investing if its working. I know I am.

Interesting fact, more than $2.6 Billion of real estate acquisitions have taken place solely in Manhattan since the 1Q 09. The majority of our clients and investors (hard money investors as well as mezzanine equity, and preferred equity) are all aggressively seeking distressed developments.

Based on observations, there obvious is significant losses for those who have purchased at the “peak” of the market during 2006-2008, and those who have leveraged up during these times are being punished now. Concurrently those hard money lenders who lent up to 80-100% loan to cost during those times are not trying to liquidate the senior debt on un-finished or under-funded development sites. Based on what I have seen so far, from speaking with developers, accredited & institutional investors, the current focus is on distressed debt and distressed real estate investments.

The major players now are the ultra elite, and well capitalized private equity firms and ultra wealth families looking to purchase “trophy” assets which are now “on-sale”- those words were once an oxy-moron especially for Manhattan. Though right now Manhattan is on sale. A few examples AIG’s Wall Street and Pine Street buildings were sold for a mere $100/SF to a consortium of Asian Investors and Young Woo & Associates . To give one an example, at the peak of the market, Harry Macklowe purchased a “trophy” office building that has a negative CAP rate (at the time) which was in excess of $1,500/SF…that is a drastic reduction in prices that office buildings are being traded right now.

On the financing and lending arena, there are new real estate investment debt firms who are aggressively seeking to invest in bridge situations. The majority of the private commercial lenders who have completed 1st stage funding for bridge funds are now placing a heavy emphasis on distressed debt transactions as well as note sales. An all to common scenario (as stated above in the vulture investor perspective) is when the lender has offered the owner a discounted buy-back of the original debt balance at a newly discounted rate. A debt investment bridge loan fund views this scenario as an opportunity for a developer to re-acquire the debt position at a substantial discount. Debt investment firms are ready to provide capital to the owner/developer assuming there is a significant spread between the original balance amount as well as the newly discounted senior debt amount.

It is very interesting to see how the hard money lending or private commercial lending environment has adapted to the current market conditions. Well capitalized private commercial lending has actually been more lucrative now as opposed to previous times of prosperity (2006-2008). During the “peak” economy, hard money lenders were lending capital based on high loan-to-values (LTVs) and based on even higher expectations on inflated rents and inflated sell-out valuations. This feeling of high expectations was a common “euphoric” state in the lending markets. Though unfortunately, salaries for the average American did not increase at a proper amount to sync with the increase in housing prices- therefore housing demand plummeted and led to a chain reaction.

I am always a strong believer of free market capitalism, and we are seeing this take place every day in the commercial real estate markets. Hard money lenders and private commercial lenders who lent with unrealistic expectations (practically every single lender) are now being severally punished. “Vulture” investment firms, ultra elite families (that I have never heard of) have came out unscathed and super cash-strapped ready to shop for trophy assets.

Likewise a champsionship NFL or Baseball team goes for sale due to performance, prized hotels, pristine multifamily luxury rental buildings are up for sale due to the fact that in many cases NOI is not sufficient to cover debt service (especially for properties that were acquired via highly leveraged means; mezzanine equity and preferred equity). This is an amazing and extremely lucrative opportunity, and we are seeing it every single day.

The private commercial lending climate has definitely changed. Based on our encounters and deals, make sense deals are now 50-60% discounted (compared to peak markets conditions) in the commercial arena. It definitely is extremely exciting seeing how capital flows and to what rate it will flow to distressed debt and distressed real estate opportunities.

The best Way to invest money is Real Estate.This is just my opinion.