Commercial Real Estate: Opportunities Exist for the Strong Investor

Greetings from the metropolis of Cedar Crest, New Mexico.

After a series of road trips to Arizona….Texas….and New Mexico….it is good to be home and good to be writing again. I have had a blast exploring, discovering, and experiencing the Southwest with my family.

During all my expeditions, I have been thinking a lot about my next moves with regards to my commercial real estate investing and my businesses. The one thing I believe, with all the chaos in our economy, is that this is the most opportunistic time (for strong investors) will see in a long time.

I received an email from my commercial mortgage broker, Terry Painter, that encapsulates the opportunities that exist today for the “strong Investor.”

“Hi Rob, It appears to me that commercial prices are starting to come down a bit, but usually after negotiating. This is your standard MO so I think you should do well in this economic environment. Many investors don’t want to face that their values have gone down and are refinancing. Many of them no longer qualify to refinance their properties. Often the properties qualify but the borrowers do not due to tighter underwriting guidelines and a drop in personal liquidity and credit. There is strong opportunity for stronger investors to swoop in right now. Lets keep in touch my friend, Terry”

What is a strong investor?

There are a few key attributes….

1) Liquidity – This is a no brainer…right? But this does not necessarily mean that the investor has to be liquid…BUT having access to cash is what makes an investor “strong.” Relationships with those who are liquid is a key to success in growing a commercial real estate portfolio. Outside of relationships with private money, key relationships with those who are well connected and can vouch for your character and investing strategy (you have made them money?) will do wonders to your access to cash.

2) Experience – Amateurs need not apply …unless you have a relationship with someone who has the experience and the zip code. I now understand that several lenders will not lend to investors who are out-of-state investors (the investment is in a different state from where the investor resides). Add this “same state” requirement to the lenders desire for the investor to have experience (experience to a specific asset) and now the “hoop jumping” becomes ridiculous.

3) Credit – Bad credit is the “kiss of death” when financing conventionally….unless…(again) you have a relationship with someone who has the credit score and is willing.

4) Wealth Lifelines - The key factor to success, especially in this time of opportunity,is the relationship. Too me….my weakness in any area is easily made into a strength by a solid relationship. Time and time again, it was not my smarts, or my ability to put a deal together (neither apply to me) that have made my projects successful. It has been who I know that has reduced the risk in a deal and increased the success for not only me but my investors as well.

Now….the one thing I have not mentioned is the increase in seller financing that is now more and more prevalent. But that does not cancel out the need to have access to cash….but I will leave that until next time.

Until next time……rob

Photo Credit: Sarah Giesecke