The coming bust of the commercial real estate bubble.

[JDPriestly]

A friend asked me to ask DUers if anyone knows of an investment or some way to avoid the awful effects of the coming bust-up of the commercial real estate market. Does anyone know of anything?

And then, the horrible, cynical question: Are there any investments that will benefit from the bust-up?

How does this work? A lot of people lose money in these crises, but a lot of other people make money. How do they do that?

[no_hypocrisy]

1. You save to make a deposit on the properties when they're in foreclosure I suppose.

[Juneboarder]

2. Ways to avoid the effects...

Please share with all... we'd all like to know how to avoid the effects of the commercial real estate bubble burst. I'm afraid that is what will cause our country to go spiraling down...

[Duer 157099]

3. I think that if more people took a moral stand to not benefit from the misery of others

then this world just might have a fighting chance at a real decent humanity.

Just a general statement and I know all of the logical rational arguments against it.

[kimmerspixelated]

4. One way to triumph,

in the foreclosure sales market is in the huge surplus funds market. The deed owner doesn't realize he is owed the overage of the sale price on said property, after everyone is paid-taxes, liens etc.,.. The court rarely tries very hard to contact the owners, the proceeds then lie around in an account earning interest and then is eventually escheated to the state. Locators, finders and finally a lawyer can get this money back to the owners-after all it was their property! Sure there's a finder's fee, but the previous owner gets some well needed money back! The finder has a new career, and all flourish. It's not all bad or evil.

[Political Heretic]

5. We're on our way to a "double-dip" depression.

Hope I'm wrong.

No, really.

[On the Road]

6. There are Several Ways to Trade Against Commerical Real Estate

Here's an article which discusses exactly that.

The most straightforward way is by via ETFs, which can be traded like stocks.

Shorting a symbol like FIO causes your investment to go up if the commerical and industrial real estate securities on which it's based go down.

Another is by buying short ETFs. SRS does this -- it is not specific to commercial real estate, but according to one article is weighted strongly towards commercial.

The most direct way is by looking around for a small commercial property to buy at the right moment. There are some fire sale prices out there by buying from wholesalers or from auctions.

All these have their pitfalls. If you look at the historical graphs of those ETFs, the trends are not what you might expect. It might almost be better to wait until the news is absolutely catastrophic and then buy, buy, buy.

Buying property directly can be very lucrative if you hit it right, but there is a learning curve and a lot of unexpected costs involved. My girlfriend and I looked at a fairly large storefront property in Baltimore last month that was part of an estate sale. It had two stores with three apartments above them and was going for $150,000. But although the location was heavily traveled, the block was not good, rents were low, and it required a lot of work. Plus we have no experience with commercial tenants.

[JDPriestly]

8. Thanks. My friend was especially interested in your information.

[MidwestTransplant]

7. The commercial real estate bust is already here. It happened.

Everything that will eventually happen is already price into the financial markets. Does that mean there won't be a lot of foreclosures, etc? No, but it's in the market already so it doesn't portend horrible things for the economy, at least in my opinion. The bust that everybody is talking about is a result of loans that are underwater needing to be refinanced. If the mortgage can be paid, the lenders will find a way to extend the loans.

[EvolveOrConvolve]

10. Exactly - the commercial RE bust has already hit

We're probably in the worst of it right now, or close to it. Unlike regular consumers, however, commercial real estate investors often have greater access to financing and are usually pretty imaginative about it.

[dysfunctional press]

9. invest in guns and lots of ammo.

and you'll be just fine.