My reply is simple; commercial real estate (CRE) is a long term hold. The days of a rapid appreciation in value are over for this cycle. CRE has a cycle like all industries. Many experts believe that the peak was reached in 2005/2006.
However, there are still opportunities in this market. Cash is more important. I hate using cliches but we are nearing the point of "cash is king."
Another point to consider, timing. Because CRE is a long term investment and the thought of buying today and selling tomorrow does not work for this industry should not keep investors sitting on the sidelines when there is a well located property. While CRE is a long term investment, the reason to buy now cash on cash returns is money that you see in the bank on monthly basis. It's not uncommon to look for a 10% cash on cash return and then when you factor in depreciation and equity buildup the real return is much higher!
Now is the time to make sure you have the right leasing and management team in place and operate the property to its full potential. That is how you will reap the benefits of your investment in CRE.
Posts
As San Antonio Office Market Rebounds, Transwestern Takes Over at 2MSF
Mixed-Use
-
With San Antonio's office market rebounding in the third quarter,
Transwestern’s local office hopes to take advantage of that good karma with
the contract ...
16 years ago
1 comment:
Below is the fax I received from my client Dick Oliver:
"I couldn't agree more with the original post. Commercial Real Estate is now a win-win situation. It's now a buyer's market in the low end of the cyclical trough. In addition, if you do a COST SEGRAGATION STUDY you can add another 2% to 3% return on cash thru IRS accepted accelerated depreciation. I've been retired for five years and recently purchased my third property in the Phoenix area. All triple net leases, well managed cash cows."
Post a Comment