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The When of Commercial Real Estate Investing

Todays Date: October 18, 2018

Income property investors are wondering if now is the right time to buy. It might seem that good investment opportunities fluctuate with the market but the truth is, depending on the investment type, now may or may not be an ideal time to buy.

It is important to note that in the case of acquiring income property the timing of the purchase is not as important as how the property is purchased. The method of purchase offers protection from the ups and downs of economic cycles.

There is both support of and opposition to this method, but the fact remains that to allow this spending, new bills have been printed; therefore, there is too much money in existence.

Using historical statistics, the current climate can be dissected to some extent. Net Gain describes a recession as a manner of alleviating surplus. There have been 20 prior recessions since the start of the 20th century, all of which have made a full recovery. Statistics show that the length of time between peaks of a recession determines the level of excess, which indicates the severity of the next recession.

History can lend some insight into what the present situation means for investing in income property. The current recession is in its 20th month. Based on past recession averages of 59 months peak to peak and 14 months peak to bottom, now should be a good time to invest.

But knowing that the time is right doesn’t mean the process for buying the property is irrelevant. As with every past recession peak, investors that are hurting financially today probably made poor decisions at the time of the purchase. Entering into poorly written agreements, acquiring excessive debt, failing to account for expenses, and other pitfalls can turn an investment into a money pit.

As NetGain has addressed in previous articles, these issues are not to be taken lightly and should be strongly considered and addressed before making the decision to invest. Right now terms of mortgage are a critical point of focus due to the influx of currency. With increased interest rates, inflated prices, and strategic terms, investors can ultimately use money of decreased value to repay the mortgage.

The key is to negotiate the mortgage correctly using the following guidelines: -Interest Rate: Should always remain fixed -Term: 20 years or more -Due Date: None -Mortgage should be eligible for gradual liquidation or prorated write-off -Debt should be non-recourse -No lock-ins over one year -No pre-payment penalties over 1.5% -Eligible assumptions will be accepted

Today’s economic environment presents an attractive investment opportunity for acquiring income property. Considering the key components discussed in this article will ensure that the transaction goes smoothly and the investment is set up for success.

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