Thinking On How California Foreclosures Could Impact Commercial Property Investment

California foreclosures and how they might affect California commercial properties

should really be studied by anybody who is either sticking with Golden State real estate or is considering jumping into the California markets. Some may question whether it's a good idea to stay in such a down market but it's a fact that a savvy investor can make money no matter characteristic of the market in question.

With a year-over-year increase of 15% in the rate of CA foreclosures now might not seem to be the greatest of times to get into a market that may actually not have found bottom, but there are a number of experts that believe it has. They also believe that these foreclosure rates portend an issue with commercial real estate that an investor might be advised to pay attention to.

In these markets, it may be that lenders, banks and holders of commercial real estate loans have been hesitant to start taking those properties back, which might be artificially keeping the rate of commercial CA foreclosures down. These holders of notes on commercial properties usually have many residential foreclosures to deal with and are trying to dump those properties even at a loss in some cases.

The key words, of course, in this scenario are "some loss." This means that an acceptable loss is far preferred nowadays than a complete loss, which commercial real estate could end up costing many a bank if the situation is allowed to remain at the status quo. Investors with solid cash financials and backing by syndicates and the like may be able to make something out of this situation, by the way.

The common term for investors who look to move into residential and commercial real estate markets in turmoil, which is putting it mildly out in the Golden State, is "vulture investors, " though that term is somewhat unfair. That's because economic activity needs just as many vulture investors as it does prime investors if the markets are ever to return to an actual and realistic state of equilibrium.

It's an open question whether this exact moment in time is the best time to get into the acquisition of distressed properties, though, because other experts believe the rate of CA foreclosures -- both in residential and commercial properties -- is going to go through what's called a "double-dip, " in terms of prices these properties will fetch.

Many investors should look at handling this sort of possibility by watching the markets closely to see whether or not they have really bottomed out and then begun a long-term climb back up to reasonable levels. It may be that an investor at present will need to stick with a "purchase and hold" strategy or just sit out until the market bottoms for good and then starts climbing, if that hasn't happened has yet.

This is where guts and a flavor for real risk can stand an investor in good stead when it comes to considering CA foreclosures and what they may portend for the state's commercial real estate markets. At present, there's a lot of square footage chasing very few lessees or renters, for a fact. This creates a supply and demand scenario favorable to a buyer, though it should be a buyer who's very savvy.

by: Brian Jones.

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