Sunday, March 7, 2010

Commercial Real Estate Apocalypse: Opportunity

Let's bring this all together and talk about why commercial real estate may soon become the greatest investment opportunity of our lifetimes.

As I hope you know by now our country is both broke and bankrupt.  I believe a day of reckoning is fast approaching where the government is going to have to make some hard choices on both what they spend new money on and what cuts they will have to make to their unfunded promises.

Their first and foremost goal as politicians to get re-elected.

When the spending spree finally ends, I believe they will be forced to spend money exclusively on necessities; defense spending, social security, and medicare (although far reduced from what they spend today). 

What Americas do not need to survive are artificially inflated commercial real estate prices.  If the people find out that they are bailing out the wealthy investors who overpaid for buildings while they starve on the streets, there will be civil unrest.

I believe that the government's funding crisis is not 20 years away like many project, but will occur in less than 24 months during the heart of the commercial real estae refinancing crisis.

During this period they will be forced to make the correct decision, which is to bundle the loans together and sell them into the market to investors at drastically reduced prices.  Not only is this the correct decision for the economy but it is also far more likely due to the fact that the majority of commercial loan losses will come from the smaller banks, not the major banks that have their hands deep into the pockets of politicians. (These large banks were hurt far worse by the subprime crisis, which is why the tax payers stood ready to bail them out during the fall of 2008)

A bundled loan package that is sold out into the market was used back in 1990 during the savings and loan crisis.  The program was called the Resolution Trust Corporation. I believe there will be an RTC Part II.

This will be the moment investors need to be prepared to buy; fear will be everywhere.  As I stated during the prologue, I am working every day to prepare myself for this opportunity, and I assure you that I will inform you when these opportunities arrive. (More information coming upon the arrival of FT Real Estate that you will be able to access from the side bar on the right)

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