Commercial Real Estate Finance

Posts Tagged ‘Dave Weinstein’

Caveat Emptor!

As this recent article in the WSJ articulated, the recent run-up in stocks has given some hope to the commercial real estate market. What’s interesting is that many of the enterprises are players who typically enjoy prospering as private shops. Perhaps the warm reception Starwood received earlier this year encouraged them.

Like with the rash of private-shop-turned-public IPO’s announced in early 2007 (Fortress, Sam Zell, BlackRock…etc), I can’t help but feel a little nervous. While Zell actually sold his public company, the point remains the same. I’m not so sure I want to be buying what these guys are selling. Why? Read the rest of this entry »

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Are the markets going to flip back toward concern about deflation?

Friday’s consumer confidence print rattled markets looking for an excuse to correct. Combined with a couple recent articles about potential future trouble with the banking system, articles like this one are pointing toward a shift in sentiment. We’ve gone from myriad articles on the impending threat of inflation, to a serious mention of deflation.

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How do you know what you’re condo is worth?

Let’s say you’re long a condo unit (or more). And let’s say the only trades in your local market are distressed in nature. i.e. it’s really hard to value the unit via comps. The rental market might provide some insight.

Here’s a suggested methodology.

Years ago, before the world went mad, I learned how to gauge if a tenant could afford to rent an apartment. I learned that rent shouldn’t be more than 1/3 of a person’s pre-tax salary. The same rule of thumb, I learned, could be applied to a home and the mortgage payment. Given a market rent, you can back into the theoretical value of the unit.

Here’s an example using three theoretical apartments.

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Real questions…

…like, what to do with the inevitable?

Do you remember the opening war sequence, from Saving Private Ryan? (see here) The guys are on the landing craft headed toward Omaha Beach. They’ve already been through a long, tough ride. They don’t know exactly what’s in store, but they know it’s likely to be really bad…

A little dramatic, perhaps, but I can’t help but be reminded of that scene when I read articles like this one in Forbes (see here). “…$750 billion in refinancing needed over the next 24 months…” Ouch.

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