Commercial Real Estate: The Next Hole in the Economy
By Rick Melero, Commercial Investor, Real Estate Mentor, Member of HIS Board of Advisor
This video was designed by the media to generate more fear regarding the commercial real estate industry. However, any prudent investor can learn a few things from it.
1. Always invest with fundamentals: When investing, you should never leave the fundamentals. We buy based on income and upside not the hope of generating income some day. This developer named Jeff clearly stated that they took many risks and over built by a long shot. Learn from him and be very careful when investing. Don’t just speculate! Make sure that the cash flow will be there to weather the storm.
2. Buy more when people are in fear: When there is blood on the streets that is the time to buy real estate. As you can see from this video, there are deals to be had at a fraction of the cost to build. As an investor you should be getting your equity partners ready to buy right. Read between the lines… Jeff basically stated that in a few years he and his son will walk to the ball game and see the completed project. What he was saying was that some other smarter investor will finish what he started because he bought the deal right. Get ready because the deals are here now.
3. Know what is going on in your market place: Commercial investors need to be looking at a few indicators at all times. Supply, Demand, Vacancy Rates, Rent Rates and Employment. The video spoke of doom and gloom and yet their vacancy rates were 10%-19% not 35%-50%. If you buy the properties right you can account for the vacancy and be very competitive in the market. Keep the pulse in your investment area so that you can avoid fatal mistakes and generate more profit.
When
the market is Hot people think it will never end and when the
market is Cold people think it will never come back. The key here
is to make prudent investment decisions and take advantage of the
Cold seasons so that you are positioned for massive growth by the
time the cycle changes and the market gets Hot again. This is the time to join
forces with other investor and buy properties right.
Rick Melero
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