Many investors are anxiously waiting for commercial REO to hit the market and have not seen much inventory in the past. Just recently received a two page list of commercial REO, notes and land from one of my connections at a bank. Was wondering if this is an indication that commercial REO is going to start hitting the market. Is anyone else experiencing more activity in that market?
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I was in LA in Jan for a commercial REO conference. Heard some interesting stats! For those that are unaware. Typically a commercial mortgage is amortized over 30 years with a balloon payment in 5, 7, or 10 years. So at the end of the mortgage time, you refi your mortgage, and keep doing this until you sell or pay it off. With that in mind, over the course of the next 3 years they estimate over $300,000,000,000 in mortgages EACH YEAR will be coming due. With the tightness of the current lending regulations, and depreciation of commercial Real Estate, most will not be able to refi. It is expected that within the next several years 65% of ALL commercial mortgages in the country will be in peril. This is why you are hearing about the tsunami coming our way. Commercial REO and Short Sales will be HUGE!!
I haven't seen it yet, but it's coming. And, with the lack of commercial debt available to potential purchasers, I personally think we're about to have real trouble. We need to loosen the purse strings on commercial debt, or no one - even banks - will be able to move these properties. By and large, the price tags are simply too big and "numbers don't work" not to have debt on assets this large. Somebody's gotta tell Obama he's looking at the wrong end of the market.
Can you E-Mail me with this information about Commercial REO Group? Are there any people in CA that are looking to start a team for this upcoming flood of commercial REO's? And if so... I would love to join the team and/or receive some mentoring in the field.
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