Six months ago i would have predicted that after more than two years of turmoil in the real estate financial industry we would be bottoming out by now. However, based on latest reports from regulators, analysts and feedback from professionals we are far away from it. Today we are in more trouble than we were a year ago, when conventional lending is concerned and we may feel the pain for a while.
This lack of availability of conventional capital create a very good situation for private investors. This is especially true for investors looking at making investments that will mature within 12 to 36 months. While there is a significant increase in demand for our capital we need to continue to be careful in regard of the type of investments we are going to make. Here are some what we consider:
- We make sure that the specific investment type considered has bottomed out or is close to bottoming out. For example, while the lower end of the residential market has hit rock bottom, it is not clear that the higher end of the market has. In regard to commercial properties, it is important to understand the specific of each property and property types. While retail properties in general are suffering some types of retail properties are doing pretty well.
- We want a clear use funds. When approving an investment we don't want to throw bad money after good. We will closely look at numbers and make sure they make sense.
- Investment protected. We want to understand how we will get our investment back and be repaid. While it is difficult to anticipate where the market is going to be 12 to 18 months from now having multiple options for exit strategies is recommended.
- We invest in asset that we understand. When an investment is to complicated or convoluted we will pass because numerous are much easier.
We believe that we are entering a great time for real estate investments and encourage our investors to look at opportunities.
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