I took quick moment to read an article from the 2011 Deal Making Summit in San Diego. It definitely outlined the basis for the confusion banks are seeing in the CRE NPN and REO market.
As the article discusses, each bank has a different approach to either their idea of selling their NPN’s on the open market or taking the asset back and restabilizing or completing the project and selling it for closer to retail at a later time. Either way, banks often decide on a asset by asset basis and will decide on what’s best for the bank.
The commercial note market is ever changing and depending on what’s going on in the individual markets, it can have varying effect on what the bank does. Not to mention what the bank’s portfolio or financial capabilities are as well. There will be more bank failures. That is a given.
The wave of commercial foreclosures is just beginning and it will make the residential real estate market problems look small in comparison as too many banks have written bad commercial loans that they don’t have the capabilities or the resources to manage.
It’s important to keep in mind that bank’s were never meant to be in the property management business and for them to have to manage or hire short term or long term property management is something that they do but don’t like to do.
So what do you do to capitalize on this market in your market? Pull a list of commercial foreclosures and target the smaller to mid level banks that are on that list. Talk to your Commercial realtors in your market and network with them to find opportunities and pocket listings. More and more realtors are realizing the advantage of buying and working in the NPN market’s as it offers the biggest opportunity and return on investment and time for investors.
We have a special opportunity here in the next 36-60 months to cash in on an opportunity like never before. I’ve completely gotten away from the rehabbing, negotiating short sales, and other traditional real estate investment strategies to focus on what the market is giving us at this given moment…bad debt that banks can’t get rid of traditionally. What are you going to do? Sit on the sidelines or take action?