Investing in a CRE asset without due diligence or market analysis is just not smart.

Avoid the Sins of CRE Investment

By Stan Sonenshine in Real Estate Investment Strategies

3 weeks ago

3 weeks ago 0 0 31

A recent Globe St.com article “The Seven Deadly Sins of CRE Investment” argues, “Buying a CRE asset above its value or at a low cap rate is rarely a route to a successful transaction.” I couldn’t agree more. While situations exist where it is acceptable to pay up, such as the need to acquire a key piece in an assembly, I never advocate buying investment property without proper due diligence or market analysis. Unfortunately, vigorous deal competition coupled with the need to invest idle capital, particularly funds with time limits, inevitably leads investors to commit some of these sins mentioned in the article. After all, what is one or two bad deals in a large portfolio if the other deals are good, right? I disagree. Also, often individual investors invest foolishly because they are driven by the desire to avoid taxes on the gains resulting from a sale. So, they overpay to

In the Development Market Phase of the real estate cycle

Development Market Phase: How Long Will It Last?

By Stan Sonenshine in Real Estate Cycle Phases, Real Estate Development, Real Estate Investment Strategies

4 months ago

4 months ago 0 0 178

The business cycle is “long in the tooth,” and the real estate cycle is also very, very mature. Last year, in Timing the Real Estate Cycle, I focused on real estate cycle phases, which included Recession, Distressed Selling, Value Creation (Stage 1 + Stage 2), Mature Investment Market, Development Market and Overdevelopment + Bust. Right now, we are in the Development Market phase. Here’s how I previously described it; see if it rings true. Rents and values are up. Vacancies are down. New construction accelerates. Investors…are flush with cash. Lenders are aggressive. Values of existing properties are peaking. There is simply more capital chasing deals than there are opportunities. The downside risk is increasing. The “nothing can go wrong” mentality is taking over. New project announcements are appearing almost daily. Development Market Phase: Alive and Well Here’s what I see now: Transaction volume on the sale/investment side of business has

Crowdfunding Becomes More Popular, But Skeptics Remain

Crowdfunding: A Viable Option?

By Stan Sonenshine in Real Estate Investing, Real Estate Investment Strategies

6 months ago

6 months ago 0 0 208

National Real Estate Investor recently published an article titled Real Estate Crowdfunding Firms Push Further into the Mainstream, in which the writer argues that although first questioned, crowdfunding continues to gain a base of active sponsors and investors. One sponsor, using the CrowdStreet platform, says “it serves as a consistent, recurring source of equity, as well as a capital source that is accessible for smaller dollar amounts, under $3 million.” Crowdfunding: Who’s in the Crowd? Here’s what I think about crowdfunding: I like to enter a deal with the fewest, financially-qualified partners as possible. Either directly and indirectly having a large number of unknown partners pretty much scares me. I assume this approach works well when the market is good and properties are performing well. But I am always thinking ahead. What happens in a market slowdown, and a property funded by crowdfunding gets into trouble? The results could be very

Getting Started in Real Estate Investing: It Ain’t Easy

By Stan Sonenshine in Real Estate Investing, Real Estate Investment Strategies

8 months ago

8 months ago 0 0 393

Knowledge, Network + Money A recent article in The Washington Post offered advice on launching into the world of real estate investing; the author says, “In general…there are three things that every real estate investor needs no matter what: education and knowledge, a good network, and money. But not necessarily your own money.” Stan’s Viewpoint Everything the author says is true except it isn’t that easy. Learning markets, finding good deals, and hooking up with the right professionals and investors takes a lot of time, persistence and patience. Like any startup, the first few deals will likely be less successful due to lack of experience and inability to foresee problems. In addition, these deals will likely require one’s own money or that of close friends and family. New investors are also likely to underestimate the cost of ownership and the amount of time and effort to manage. Very small deals don’t

Are You Prepared for the Inevitable Real Estate Downturn?

By Stan Sonenshine in Real Estate Cycle, Real Estate Development, Real Estate Investment Strategies

1 year ago

1 year ago 0 0 609

Heading for a Correction? A BisNow article from earlier this year directly asks the question on everyone’s mind: “When is the correction going to hit?” In “From Bullish To Bearish: Tips To Prepare For The Inevitable Real Estate Downturn,” the author says not to worry so much about when it hits, but more so with how prepared you will be when it does. The article offers these four tips: Negotiate long-term leases Pursue Rehabs and Upgrades Stop Putting Off Maintenance Embrace Technology Stan’s Viewpoint For the most part, I agree with this article. I would add that the strategy for a given property really depends on the property’s current status. That status will dictate whether to sell (if a key lease has just been extended), upgrade (a longer-hold strategy) or refinance. I would caution this: If an owner is looking at new financing, the debt/value ratio and debt service coverage should

Avoid the Sins of CRE Investment

Development Market Phase: How Long Will It Last?

Crowdfunding: A Viable Option?

Getting Started in Real Estate Investing: It Ain’t Easy

Are You Prepared for the Inevitable Real Estate Downturn?

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