I think commercial real estate is currently overpriced with cap rates too low. Interest rates are low, but underwriting is also more strict, so some investors can’t get financing. I think cap rates have to increase in the next couple years (prices decrease), especially since interest rates have to increase eventually.
I spoke to an investor today that felt exactly the opposite. He thinks now is a good time to buy and that prices are going to increase in '09. If rates go up then how can cap rates decrease and prices increase, especially since cap rates have been very low for the last several years? I know that the relationship between cap rates and interest rates isn’t always inverse, but I can’t see high interest rates and low cap rates existing at the same time. So who’s nuts?
I think mid to late '09 will be the time frame values start going back up. I think the remainder of '08 is going to be a downward spiral.
On another note, I’ve been seeing way too many posts in these forums that have been bumped like this one. Some 3 or 4 times before they get an answer. What happened to everyone? This used to be a 24 hour answer reply haven for noobs and seasoned pros alike.
I hear ya. It seems like other re forums are the same way. Replies are coming slower and slower. I would guess that many newbie investors with just enough knowledge to sound like they know what they’re doing are settling back into their 9 to 5 jobs, and anyone with some actual money and experience are busy doing deals. By far the best way to learn the commercial ropes is to get out in your market, meet people, and make deals happen. I would be curious to know the actual % of investors on these forums that have significant wealth and success in commercial real estate.
The real estate fad is over! That’s why I think there are fewer replies. There simply are not the hordes of newbies that there were in the past. I’ve been seeing that in every aspect of real estate investing, whether it’s an internet forum or your local REIA.
My opinion is that real estate prices could continue to decrease through 2009 and beyond, thanks to the pending flood of foreclosures and oversupply of houses for sale. However, if you wait for a “perfect time to buy”, you’ll never buy. Right now, prices are falling. You won’t know that prices hit bottom until they’re headed back up. At that point, you will have missed the bottom and be paying ever increasing prices. So, when’s the time to buy? Yesterday, today, and tomorrow! Regardless of when you buy, you’ve got to buy at a BIG discount.
Tatertot, believe it or not you can analyze (big word I know) the market and make an educated guess as to what the market is going to do in the near future. And guess what? That can differ from one market to the next. Isn’t that amazing? Besides any of that, this is a commercial forum. I’m asking from a commercial perspective, which you obviously know nothing about. Keep trying though. I’m not asking anybody if they think now is a good time to buy. A good time to buy is when you find a good deal. I’m asking what everyone thinks the general market will look like in a year or two.
You assume I’m some newbie. I’m a commercial appraiser/investor. I don’t need your opinion, but I like to know what others think. There are alot of factors that will effect the prices of real estate and how investors buy and sell. I thought it would be interesting to hear everyone’s opinion. Obviously it is an interesting time to be involved in real estate. If you’re going to attempt to give a response at least make it somewhat interesting. You didn’t contribute a thing to this thread.
Save your pathetic smart alec punk comments for a time when they’re actually warranted. Go back to managing your one or two failing rental homes.
Sorry, but it really urkes me when individuals make unneccesarily rude and sarcastic comments, especially for no reason. People should join a discussion if they have something useful to say or just not participate. Whatever…
Mabye another good question is what market are you in? Or what are you trying to do. Houses are going down as much as 40% in my area (Bakersfield Ca) but I have not seen any reduction in 5 + unit apartments.
To answer your question I think we are 55% through the sub prime resets so we have a long way to go. You can reason that when you no longer see auctions and reo’s that will be the floor. As far as when this will happen it may not be a one time for all area’s type of thing like the stock market is the same price for everyone anywhere, real eatate is local.
I believe that right now is the best time to purchase properties such as Mobile Home Parks, Self Storage Facilities and Mid to Low Rent Multi Family units and wait awhile on buying the High Rent properties.
I believe you need to be more specific, so we can pitch in.
What are your goals? Short term, 2 year, 5 year plus?
How much inventory is available on what you are intersted in?
What cap rate are you looking for?
Do you have a specific type of commercial property you are interested?
Are you plan on occupying any of it?
Do you have deep enough pockets, to make a decision even if market adjusts more south after you buy.
There is no bad time to buy, if the price is right.