subject: Commercial Real Estate May Be The Best Investment Today [print this page] We are currently experiencing some of the most turbulent times in our financial history. At times such as these there can be a lack of confidence in our investment decisions as we watch the national news inform us of wild market fluctuations in the stock market. This doesn't mean that all investments fall into the same category. There may be strong market investments such as commercial real estate, which has been holding its value. Real estate development firms have been able to weather the storm and deliver outstanding investment returns to their clients through commercial real estate.
Federal Government Involvement
The financial markets have been rocked with uncertainty. The Federal government has become involved to stabilize the markets with the creation of Asset-Backed Securities Loan Facility or TALF. This agency will help to keep credit flowing and increase the security of the assets that back these credit facilities. By doing this it helps to insure the prospects of success when informed investors seek and find undervalued commercial property to purchase. Without this stabilizing agency firms would be greatly hindered in their efforts to conduct business as usual.
The commercial real estate market is still doing great, even in today's challenged credit environment. Over the past 60 years commercial real estate has trended upward, often with double digit gains in a given year. Although there is no guarantee of such returns the commercial real estate market has held up better recently than most experts had predicted.
Rental Market Is Strong
During the recent 'credit crisis' mortgage markets suffered greatly and those that owned homes often saw the value of their investment drop for the first time in several generations. They no longer had confidence in this 'no brainer' investment and many felt the wiser choice was to keep their cash and rent a house or apartment. As a result of this type of thinking commercial rentals and multi-family properties have seen a rise in occupancy. This situation has created an opportunity for real estate development firms in a couple of ways.
Since the demand is strong for rental properties and commercial real estate the value of such properties is on the rise as well as the rents that are collected. This creates a great cash flow situation for companies that manage properties and market real estate development companies. When rents increase the value of the property will rise as well, thus creating a double opportunity to cash in on what's happening with the economy today.
An additional opportunity exists with the rising cash flow provided by increased rents. This gives real estate development firms the chance to buy attractive properties and leverage their position to get the most from the dollars invested.
(TARP) Or Troubled Assets Relief Program
With the increase in foreclosed properties happening at record levels it has a tendency to restrict the normal flow of investment in the real estate market. The Federal government has created the Troubled Assets Relief Program or TARP to assist the real estate market and to keep it liquid to prevent foreclosures on homes and stabilize the markets. This bodes well for real estate development firms for they are better able to transact business as usual with greater confidence and a greater degree of success. Markets that are strong bring a better investment opportunity to investors and real estate development companies.
by: Chris Harmen
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