| The When of Commercial Real Estate Investing |
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| Written by Allen Cymrot |
| Saturday, 03 October 2009 08:27 |
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Regardless of the type, investors' first and foremost concern is whether or not now is the right time to buy. Surprisingly, the answer to this question differs depending on the investment at hand. The ideal time to buy income property may not be the right time to acquire other types of investments and vice versa.
Regardless of the type, investors' first and foremost concern is whether or not now is the right time to buy. Surprisingly, the answer to this question differs depending on the investment at hand. The ideal time to buy income property may not be the right time to acquire other types of investments and vice versa. The way in which income property is acquired affects the success of the investment more than the time at which it is purchased. This is due to reliance of income property on economic fluctuations. In present circumstances this is overtly apparent as the government's expenditures continue to surpass revenues in response to the recession. There is both support of and opposition to this method, but the fact remains that to allow this spending, new bills have been printed; therefore, there is too much money in existence. When evaluating the timing of income property investment, past recessions can provide insight into the current economical situation. The severity of a recession is affected by the amount of excess generated in the previous recession. A longer span of time between peaks results in more overage. History can lend some insight into what the present situation means for investing in income property. The current recession is in its 20th month. Based on past recession averages of 59 months peak to peak and 14 months peak to bottom, now should be a good time to invest. With the understanding that the time is right, it is now critical to discuss how to invest given the specific aspects of income property and the current economic climate. Key mistakes made during recession peaks will cause property owners significant financial hardships. Those suffering in the current conditions most likely set unwise terms, borrowed too much money, demonstrated poor follow-through, and set the stage for higher expenditures than revenues. As NetGain has addressed in previous articles, these issues are not to be taken lightly and should be strongly considered and addressed before making the decision to invest. Right now terms of mortgage are a critical point of focus due to the influx of currency. With increased interest rates, inflated prices, and strategic terms, investors can ultimately use money of decreased value to repay the mortgage. Honing in on a few important aspects can create a mortgage that will work well in this environment. First of all, interest rates should be fixed, the loan should be for no longer than 20 years, and there should be no due date. Other important conditions include amortization, non-recourse, and acceptable assumptions. Finally, lock-ins should be less than a year and early payment penalties should be less than 1.5%. Today's economic environment presents an attractive investment opportunity for acquiring income property. Considering the key components discussed in this article will ensure that the transaction goes smoothly and the investment is set up for success. DISCLAIMER: This article is provided as information only and is not to be taken as financial advice. Allen Cymrot is a veteran investor and strategy consultant for real estate investment. His investment principles and recommendations for cap rates can be found at http://www.netgainrealestate.com Grab a totally unique version of this article from the Uber Article Directory |