It has been over fifty years since real estate prices and interest rates have been this low at the same time. After the zillion megaton explosion of the real estate bubble, prices have dropped to all time lows and bargains abound.
It does not take a genius to see that right now cash is king and if you have a few bucks set aside you need to look into investment real estate. You need to be extremely careful however and use all of the tools at your disposal before making the leap. All you need to do is a drive a few blocks in any urban area to see all of the For Lease signs that are there, and many that have been there for a long, long time.
Because of the floundering economy, many businesses have gone belly up and one of the biggest casualties of the entire recession (can you say depression?) has been and will continue to be commercial investment real estate landlords.
They are the ones that are left holding the proverbial bag when businesses collapse and tenants are forced to flee, many of them without paying any lease severance penalties. When businesses can no longer afford to stay in a commercial space for want of revenue, the onus goes onto the landlord to make sure that there is a great dialogue with the tenant.
In the old days a landlord would just evict a defaulting tenant without too much thought and then raise the lease prices for the next incoming business. With today’s epidemic of failing retail shops, service establishments, restaurants, auto and body shops, and ever other kind of small to medium sized businesses, investment real estate leasing space is begging for tenants.
The landlords can avoid a hasty departure by failing businesses by working with them to temporarily reduce or defer lease payments. This will give the establishment much needed breathing room and free up some cash flow.
The benefit to the landlord is that he will eventually see some rents from the businesses when the economy picks up. One thing is for certain and that is that the economy will improve eventually.
It may take longer this time to recover, but historically speaking, economies are cyclical and they always come back. When the economy and the failing businesses do recover the landlord will have looked like an angel to the business, eliciting loyalty, plus it will have made sound business sense.
For commercial real estate owners who cannot work out a plan for their tenants the consequences are grim. Take away that large payment each month and pretty soon you will feel it in your pocketbook, even if your pockets are deep. Many have been forced to default on their commercial loans and have watched their properties get seized by the banks.
If you are an investor looking to get into investment real estate then this is a great time. You can pick up an REO (bank owned) property for very little. Just make sure that you have a tenant or two lined up before you purchase or you could be the next one facing a foreclosure of your own.