2 Reasons Why The Price Of Your Commercial Real Estate May Drop Steeply

2 Reasons Why The Price Of Your Commercial Real Estate May Drop Steeply

Two cyclical forces are occurring today which make a significant change in the price of commercial real estate seem inevitable.

           First, the inflation train is running so hot it’s going off the tracks. Completely blowing past the national target of 2% annual inflation, the US just hit 8.5% in March. That is the highest rate posted since 1981! Your alarm bells should be screaming right now. We were lulled into a sense of security over the last mild decades to now face this new 40-year high.

           Second, in response to the above, the Federal Reserve is aggressively raising interest rates on borrowing money. May 2022 saw the largest single hike since the year 2000! Continued increases are already promised for the immediate future; this is not a one-time fluke. It also will not pass quickly; commercial real estate buyers will be locked into these interest rates for the next 15, 20, or 25 years!

           These changes will affect the total price of what buyers can afford in the short term and how much they can budget for the decades to come. As we have seen from history on the chart above, the SBA rates and the price of property have an inverse relationship. Historically high SBA rates have seen low per square foot commercial property prices, and historically low SBA rates have seen high per square foot commercial property prices. The presently rising interest rates will build pressure on the market until the dip starts in property values.

           Depression, recession, or correction, YOU CAN PROFIT FROM THE COMING DEVALUATION by playing your cards right in the immediate days ahead. The last cycle saw 4 years from the tip to the bottom-out, and then another 5.5 years to climb from rock-bottom back to previous values – a 9.5-year hole!

You have time right now to act before the momentum fully swings against you. Buyers still have a window to get a reasonable loan rate, and backlogged demand still sees an immediate desire for commercial property, even if overpriced. Start your cash-out process now before this window closes and the charts flip. YOU’VE BEEN WARNED! A commercial escrow typically takes a 60-day minimum, plus a listing period of 2 to 6 months to attract the best offers. If your property were "For Sale" this very day, today, you would be racing against the clock to get this deal closed by early Autumn. But you see, once the price is locked in, escrow can take as long as needed because the cold hard cash you receive will not change no matter how much the market drops. This is your race to win!

Please do not delay your consideration of how much equity you are willing to lose. We have numerous options available that will earn you a boatload of cash letting go of your property while deferring some or all of the capital gains taxes. Do not let Uncle Sam's sticky fingers hold back the sizeable payday your hard work in this property investment has earned you. Call Jim for free today at 949-374-2052, that is 949-374-2052, to hear exactly how much unrealized money you stand to make on paper. Call today before that value changes; you deserve to know the options available to make an informed decision while you still have time!