As a 40 year commercial real estate broker and investor, Tom’s comments relative to the industry operating with 90% leverage is patently false! Perhaps large institutional REITS can obtain higher loan to value ratios, but typical underwriting requires a minimum of 30% equity often times more depending on the asset and NOI.
Certainly there are investors who achieve higher leverage, but those provide the value investors the opportunities to pick up the pieces when they go bust.
Clearly like any asset class real estate is wrought with malinvestment for the same reason equities, cryptos and bond markets. It Starts with paying too much for the asset to begin with, ignoring the warning signs that are usually in plain sight and then talking themselves into it being a good investment.
To borrow one of my favorites from Robert Ringer: “Hyping oneself is toxic, believing one’s own hype is deadly”!
While I don’t disagree that real estate is facing headwinds with a higher rate environment, it is not on the edge of a cliff as depicted by Tom in last weeks missive. The industrial sector in particular remains robust and properly underwritten real estate investment even in the retail sector offers stable returns.
Your statement that the entire commercial real estate market operates with 90% mortgage leverage is not correct. For the last decade, lenders have rarely exceeded or even met 75% leverage.
Why are you staying in Maximum Safe Mode when gold surged over $250 over the last several months. Have we missed out on buying gold investments or do you think gold will drop in price again before it shoots up to over $2,000?
In the first sentence of the second paragraph, the word should be "pare" as in cut, not "pair" as in two things. So, stocks rallied to combine (pair) losses?
And in Dan's missive, in the first paragraph, the word should be, "path," in the first sentence, not "past" Do you, "whistle path the graveyard?"
You need to proof read your articles before you send them out; just saying. Bill would never make such mistakes. C'mon guys.
As a 40 year commercial real estate broker and investor, Tom’s comments relative to the industry operating with 90% leverage is patently false! Perhaps large institutional REITS can obtain higher loan to value ratios, but typical underwriting requires a minimum of 30% equity often times more depending on the asset and NOI.
Certainly there are investors who achieve higher leverage, but those provide the value investors the opportunities to pick up the pieces when they go bust.
Clearly like any asset class real estate is wrought with malinvestment for the same reason equities, cryptos and bond markets. It Starts with paying too much for the asset to begin with, ignoring the warning signs that are usually in plain sight and then talking themselves into it being a good investment.
To borrow one of my favorites from Robert Ringer: “Hyping oneself is toxic, believing one’s own hype is deadly”!
While I don’t disagree that real estate is facing headwinds with a higher rate environment, it is not on the edge of a cliff as depicted by Tom in last weeks missive. The industrial sector in particular remains robust and properly underwritten real estate investment even in the retail sector offers stable returns.
Long Time Bonner Devotee
TC
Raytown, MO
Just till my skin clears up!
Your statement that the entire commercial real estate market operates with 90% mortgage leverage is not correct. For the last decade, lenders have rarely exceeded or even met 75% leverage.
Why are you staying in Maximum Safe Mode when gold surged over $250 over the last several months. Have we missed out on buying gold investments or do you think gold will drop in price again before it shoots up to over $2,000?
In the first sentence of the second paragraph, the word should be "pare" as in cut, not "pair" as in two things. So, stocks rallied to combine (pair) losses?
And in Dan's missive, in the first paragraph, the word should be, "path," in the first sentence, not "past" Do you, "whistle path the graveyard?"
You need to proof read your articles before you send them out; just saying. Bill would never make such mistakes. C'mon guys.
Dave Barabash